On 6 May 2025, the Bank of England (BoE) published a speech by its deputy governor for financial stability, Sarah Breeden, entitled ‘International payment rails: the value of a harmonised gauge’. The speech explains why the digitalisation of money and assets is important to the BoE, why interoperability is important, and what the next steps are for the UK stablecoin regime.

Interoperability

Ms Breeden highlights the importance of interoperability to ensure that users can switch seamlessly between different forms of money and across asset classes, particularly in relation to new technologies. She notes that technical interoperability could be achieved through a single unified ledger where tokenised assets and money coexist with central bank money on a single platform, and ‘soft’ interoperability can be achieved by developing harmonised technical standards – both of which would require harmonisation and collaboration between regulators and authorities.

Feedback on stablecoin proposals

The BoE has received three key themes of industry feedback:

  • The proposed regime does not align with existing stablecoin business models.
  • The transition into the BoE’s proposed regime might be challenging the more it differs from the Financial Conduct Authority’s regime for non-systemic stablecoins.
  • There are concerns that if the UK has a regime that looks and feels different to regimes being implemented in other countries, this will cause challenges for firms wishing to operate cross-border.

Next steps for the regime

The BoE has taken account of the feedback received and wants to continue its dialogue with industry as it continues to refine its proposals for a UK stablecoin regime. Ms Breeden outlines the BoE’s planned next steps for the UK stablecoin regime, which include:

  • Differentiating more clearly between “payments coins” that are used in the real world (which are the focus of the BoE’s regime) and other types of stablecoin that have more investment use cases or play a settlement role in the crypto ecosystem (which are not currently judged to be systemic).
  • Also distinguishing between the very large, systemic payments coins that the BoE’s regime is designed for, and those which are smaller but may have the potential to be systemic in the future.
  • Being “very mindful of the glidepath into a systemic regime for payments-focused stablecoins”, including how the BoE identifies stablecoins that are on that trajectory, to ensure that any rapid growth in stablecoins that do not start off as systemic can be appropriately managed within the regulatory framework.
  • Reviewing (as a result of feedback) how the proposals might permit firms to receive some return on their backing assets, so that safe, systemic payments coins in the UK can have a viable business model.
  • Potentially using sandboxes in the payments context to allow further open dialogue and experimentation between industry and authorities, so that the BoE can understand how to deliver features such as interoperability whilst also learning more about the business models and use cases for stablecoins as they continue to develop – and sharing those learnings with authorities in other jurisdictions to support harmonisation and equivalence in outcomes.