The UK is moving to put stablecoins at the center of a new Bank of England mandate aimed at supporting innovation in digital payments.

HM Treasury said on Thursday that the government plans to give the Bank of England, the UK’s central bank, a secondary objective to support innovation in payment systems and emerging forms of digital money.

The mandate will cover payment systems that use digital settlement assets such as stablecoins, while financial stability will remain the BoE’s primary objective.

The proposal comes as the UK increases its work on stablecoins through regulatory changes, payment experiments and closer coordination with the US, signaling that the topic is now part of a broader policy push rather than a standalone crypto initiative.

BoE innovation mandate faces September debate

The new responsibility would extend an existing approach used to regulate central counterparties (CCPs) and central securities depositories (CSDs), which help clear, hold and settle financial assets.

Under the proposed change, the central bank would report annually to Parliament on its progress toward the payments innovation objective. That reporting line could make the mandate more visible to lawmakers and market participants as the UK continues to define how much room stablecoin-based payment systems should have inside the existing financial framework.

“Developments in digital payments technology, including tokenisation and DLT [distributed ledger technology], have the potential to transform financial markets across the globe,” City Minister Lucy Rigby said.

The government expects to implement the objective through amendments to the Financial Services and Markets Bill, which is scheduled for further debate in the House of Lords on Sept. 7 and 9.

Stablecoin rules still face industry concerns

The new mandate’s impact may depend on how the BoE uses its annual reporting requirement, Maksym Sakharov, co-founder and CEO of on-chain banking infrastructure provider WeFi, told Cointelegraph.

“The objective is secondary to financial stability, so it overrides nothing, but the bank will have to publish an annual account of its innovation efforts in payments and digital money,” Sakharov said. He added that the requirement could increase public scrutiny of the stablecoin rules the central bank finalized in June.

Sakharov pointed to requirements for systemic stablecoin issuers to hold at least 30% of their backing assets in non-interest-bearing deposits at the central bank.

“The reserve split is the first thing to fix,” he said, adding that the requirement could determine whether a stablecoin business is commercially viable.

UK steps up stablecoin push

The new mandate follows a broader UK push involving stablecoins, or crypto assets designed to maintain a stable value by tracking assets such as the US dollar.

In August, a group participating in the Bank of England’s Digital Pound Lab began testing whether a stablecoin and a simulated digital British pound could work together in a cross-border trade payment. The experimental platform does not use real customers or money, but it gives the BoE and industry participants a controlled setting to examine interoperability between private digital money and a potential state-backed payment instrument.

In mid-July, the UK and US published a joint statement on stablecoins, with the governments saying they “intend to enable the use of stablecoins in cross-border finance” and calling for greater alignment of their regulatory frameworks.

The BoE also previously dropped plans to limit stablecoin holdings to 20,000 British pounds for individuals and 10 million pounds for businesses, replacing them with a temporary 40 billion pound ($52.9 billion) issuance cap for each systemic stablecoin.

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