HMT announces new secondary payments innovation objective for BoE

HM Treasury has announced that the UK government intends to give the Bank of England (BoE) a new secondary objective to support innovation in payment systems and emerging forms of digital money. The secondary payments innovation objective will sit below the BoE's primary financial stability objective and is intended to ensure UK payments regulation keeps pace with technological change and create conditions for innovation. The BoE already has a secondary innovation objective when regulating central counterparties and central securities depositories, introduced through the Financial Services and Markets Act 2023. This reform will extend the same approach to systemic payment systems, including those using digital settlement assets such as stablecoins.

Key features of the announcement include:

• The BoE will report annually to Parliament on how it is advancing the innovation objective.
• Financial stability will remain the BoE's primary objective; the new secondary objective will not require the BoE to support innovation where doing so would undermine financial stability.
• The government expects to implement the change through amendments to the Financial Services and Markets Bill, which will next be debated in the House of Lords on 7 and 9 September.

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