The Bank of England (BoE) is set to include stablecoin payment infrastructure in its domestic systems, amid a shift of stance for the nation’s traditional financial institution.
According to the bank’s official release Wednesday, BoE has outlined its outlook to accelerate tokenised finance infrastructure in the United Kingdom, taking into consideration other important aspects like stablecoin rules and potential digital pound as well.
Speaking on Tuesday at London’s City Week 2026 conference, Sarah Breeden stated that tokenised bank deposits, regulated stablecoins, and maybe a retail central bank digital currency should all be supported in the future of UK retail payments.
The stance comes contrary to how BoE had treated stablecoins and cryptocurrency in early days. There have been times when the Bank of England (BoE) was very skeptical about stablecoins due to the inherent risks involved in their usage, but its position has become more pragmatic as stablecoins have gained widespread adoption.
UK might consider smart contract payments
As per Breeden, intelligent contracts can allow for payments based on preconditions within retail finance, whereas distributed ledger technology can keep costs to a minimum and reduce reliance on intermediaries.
“We want a multilateral money system where there is competition and choice for sound money in retail payments,” said Breeden. “Tokenized bank deposits, stablecoins subject to regulation, and potentially a retail central bank digital currency must be made available for payment besides the traditional bank deposit.”
The remarks were made just a couple of days after both the Financial Conduct Authority and the Bank of England had initiated a consultation exercise regarding tokenization in wholesale markets. On May 18, they released the consultation document seeking feedback from banks, exchanges, fintech firms, and asset managers on regulations pertaining to tokenized securities and their settlement mechanisms.
Stablecoin rules set for rollout
Sarah Breeden also said the Bank of England plans to publish draft rules for systemically important stablecoins next month, with the final framework expected later this year.
She said the central bank may initially place temporary limits on how many stablecoins can be issued as adoption grows. The temporary restriction is likely to reduce risks to financial stability.
Officials have repeatedly warned that if stablecoins become widely used, people could quickly move money out of traditional bank deposits and into digital payment tokens. This can potentially put pressure on commercial banks.
The Bank of England has already started reviewing parts of its earlier proposals after criticism from crypto firms over strict reserve requirements and ownership caps.
New rules come after BoE changes crypto view
In the past, the Bank of England had adopted an extremely conservative stance regarding cryptocurrencies and stablecoins.
BoE governor, Andrew Bailey, was always emphasizing that cryptocurrencies have “no intrinsic value” and advised investors to be prepared to lose all their money. In terms of the previous stance, the central bank was regarding stablecoins issued privately just like speculative cryptocurrency coins and constantly advising banks not to issue them.
Initially, the Bank of England suggested stringent regulations regarding stablecoin holdings by both consumers and businesses. In addition to this, regulations related to reserve requirements that obligated issuers to hold 40 percent of reserves in non-interest-bearing accounts at the Bank of England negatively impacted the crypto community.
However, in recent times, the Bank of England seems to have made a few adjustments to certain aspects of its initial stance following a considerable amount of opposition from both traditional financial institutions and technology corporations.
Market participants had noted that some of the previous measures were too prohibitive to be feasible.
Now, the bank is considering revising certain elements of the initial stablecoin proposal while trying to find a way of regulating financial risks in such a manner that they do not hinder innovation.
Despite the ongoing reservations about large international stablecoins denominated in U.S. dollars, especially when there are stressful situations in the markets, the Bank of England also understands that the new technology can revolutionize the existing global payment systems.