Statutory objectives are the driest paragraph in any financial services bill, and usually the one that quietly decides what a regulator spends the next decade doing. On 27 August the government said it would give the Bank of England a new one.
Per HM Treasury’s published announcement, the Bank will gain a secondary objective to support innovation in payment systems and emerging forms of digital money, with financial stability remaining the primary duty. The scope named is the Bank’s regulation of payment systems, including those using digital settlement assets — stablecoins, in ordinary speech. Tokenisation and distributed ledger technology appear in the minister’s framing of why it matters, not in the objective’s own reach. The Bank would report to Parliament annually on what it has done about it.
None of this is law yet. It is to arrive as an amendment to the Financial Services and Markets Bill, which returns to the House of Lords on 7 and 9 September. City Minister Lucy Rigby said the change would help ensure “the UK remains a global leader in financial services”, and Sarah Breeden, the Bank’s Deputy Governor for Financial Stability, said the objective would support the Bank’s work on trust and innovation in payments. Announced and enacted are different states, and we will say which one this is when the Lords have finished with it.
So: secondary. The word does real work. A secondary objective does not sit alongside the primary one; it applies subject to it. The Bank must advance financial stability first, and then, so far as that allows, have regard to innovation. In practice such objectives shape how a supervisor writes rules, what it publishes and how it explains refusals — not whether it can say no. Anyone reading this as the Bank being told to wave stablecoins through is reading a different sentence.
It is also worth being clear about who is affected. The Bank’s payments remit runs to systemic payment systems — the plumbing that would cause real damage if it stopped. Outside that core, the conduct rules for firms holding and handling cryptoassets, and the requirements arriving for stablecoin issuers, sit with the FCA, under the rulebook the regulator was still finalising when we last wrote about it. A duty on the Bank to have regard to innovation adds nothing to a consumer’s protections and creates no compensation rights. It changes the disposition of one supervisor towards one part of the machinery.
Which is not nothing. Disposition is how regimes actually feel from the inside, and a bank that must publish its innovation homework each year is a bank that has to answer for a slow no. But it will be a while before anyone can point at a consequence.
Nothing above is financial advice, and none of it makes a stablecoin any less of a high-risk holding — the compensation scheme still does not stand behind these assets, and what you do with yours is on you.