The Bank of England (BoE) is set to receive a new secondary objective to support innovation across payment systems and digital money, as the UK government looks to strengthen the country’s position as a global financial services hub.
The new mandate will sit beneath the BoE’s existing primary responsibility for maintaining financial stability, with HM Treasury confirming that the central bank will report to Parliament each year on its progress.
The move comes as digital technologies continue to reshape payments, with the government seeking to ensure the UK’s regulatory framework can support new technologies and business models while maintaining financial stability.
Under the plans, the new objective will apply to the BoE’s oversight of payment systems, including those using digital settlement assets such as stablecoins.
The approach builds on the secondary innovation objective already held by the BoE when regulating central counterparties and central securities depositories, introduced under the Financial Services and Markets Act 2023.
However, financial stability will remain the Bank’s overriding priority. The new objective will not require the BoE to support innovation where doing so could put financial stability at risk.
The BoE oversees the UK’s critical financial market infrastructure, including systemic payment systems, central counterparties and central securities depositories.
The government said the change forms part of a wider programme involving HM Treasury, the BoE and other authorities to modernise the UK’s payments landscape and support emerging technologies and business models.
The reform is intended to provide greater accountability around the Bank’s role in supporting payments innovation, with annual reporting to Parliament providing a mechanism to track its progress.
HM Treasury city minister Lucy Rigby said developments in digital payments technology, including tokenisation and distributed ledger technology (DLT), could transform financial markets globally.
“Whilst financial stability will always remain the Bank’s primary objective, this secondary objective will support the Bank to continue to drive innovation in payments and digital finance, ensuring that the UK remains a global leader in financial services,” Rigby said.
Bank of England deputy governor for financial stability Sarah Breeden said the change would support the Bank’s efforts to encourage innovation without compromising financial stability.
“The Bank is doing a huge amount, together with government and other authorities, to maintain trust and drive innovation in UK payments,” Breeden said.
“This new secondary objective will further support that.”
The government plans to introduce the change through amendments to the Financial Services and Markets Bill, which is due to be debated in the House of Lords on 7 and 9 September. The move comes as regulators globally face growing pressure to balance financial stability with the development of technologies including stablecoins, tokenisation and DLT.
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