The Bank of England is set to retain financial stability as its primary mandate while potentially receiving a new statutory role to encourage innovation in stablecoins and other forms of digital money.

The UK government plans to introduce the additional objective through an amendment to the Financial Services and Markets Bill. The proposal would also require the central bank to report to Parliament each year on its efforts to promote innovation in digital money and payment systems, according to the Treasury.

The change would make payment innovation a formal part of the Bank of England’s remit. Britain is working on a unified regulatory approach for both conventional and tokenized payments, covering stablecoins and tokenized deposits. Policymakers are also looking at how these rules could accommodate payments carried out by AI agents.

City Minister Lucy Rigby said maintaining financial stability would remain the Bank’s top priority. The new secondary objective is intended to encourage innovation in payments and digital finance and strengthen the UK’s position in the global financial-services industry, the Financial Times reported.

Britain Advances Stablecoin Oversight

The Bank of England revised its proposed stablecoin framework in June by dropping temporary limits on the amount of stablecoins that individuals and companies could hold. The replacement measure would impose a temporary £40 billion ($54 billion) issuance ceiling on each stablecoin deemed systemic.

Stablecoin issuers could place as much as 70% of their reserves in short-term UK government debt, with the remaining portion held as deposits at the Bank of England.

Meanwhile, the Financial Conduct Authority has finalized separate rules for crypto businesses and stablecoin issuers. The framework includes simplified capital requirements that were introduced after consultation with industry participants.

Companies will be able to apply for authorization beginning Sept. 30, while the new rules are scheduled to take effect on Oct. 25, 2027.

The stablecoin sector has expanded to roughly $303 billion, up from about $200 billion at the beginning of last year, based on DeFiLlama figures. Most of the market consists of tokens pegged to the U.S. dollar.

Retail adoption has also increased. Visa data shows stablecoin transactions valued below $250 climbed from around $500 million in 2019 to nearly $70 billion last year.

The Treasury had not responded to CoinDesk’s request for comment at the time of publication.