Payments innovation objective: the Bank of England gets a growth mandate

HM Treasury has confirmed it will legislate a secondary payments innovation objective for the Bank of England, extending to payment systems and digital settlement assets the same growth-tilted duty the Bank already carries when regulating central counterparties and central securities depositories (GOV.UK). The Bank will report against the new objective annually (GOV.UK). Financial stability remains primary, but the structure of supervisory decisions is about to change.

Key Executive Takeaways

• The Bank of England will be given a secondary objective to support innovation in payments and digital money, including stablecoins, while keeping financial stability as its primary duty.
• Firms will gain a formal basis to challenge overly cautious supervisory positions on tokenisation, DLT and digital settlement assets, but only if they can evidence the innovation case.
• Boards in payments, banking and stablecoin issuance should prepare to engage with an annual public report against the new objective, which will become the benchmark for whether the Bank is keeping pace.

A structural shift in how supervisory trade-offs get argued

Secondary objectives are not decorative. Once written into statute, they oblige a regulator to show its work: to demonstrate that innovation was considered, weighed, and either advanced or knowingly subordinated to stability. City Minister Lucy Rigby framed the change around tokenisation and DLT, saying they have "the potential to transform financial markets across the globe" (GOV.UK). Deputy Governor Sarah Breeden welcomed the announcement as support for the Bank's work "to maintain trust and drive innovation in UK payments" (GOV.UK). Both statements matter because they lock in the language firms can now cite when contesting supervisory decisions they consider disproportionate.

The scope is broader than it looks. The objective explicitly covers payment systems using digital settlement assets, including stablecoins (GOV.UK). That places issuers, systemic payment operators and the banks that sponsor them inside the same policy frame. Combined with the FX turnover data showing UK average daily FX turnover at a record $4,609 billion in April 2026, up 20% on October 2025 (Bank of England), the political message is that wholesale market weight and retail payments modernisation are being treated as a single competitive proposition.

Where the friction will actually appear

The harder question is how the Bank will reconcile the new objective with the risk work already underway. Its Artificial Intelligence Consortium has been examining model risk in generative AI systems, noting difficulties applying existing frameworks proportionately given system complexity, third-party opacity, and variability of outputs (Bank of England). Payments innovation increasingly sits on top of exactly those AI-enabled components. Firms should expect supervisors to demand tighter evidence on governance and testing even as the innovation duty pushes in the other direction. The annual report against the objective will be the pressure point where those tensions become public.

For senior leaders, the immediate work is positional. Payment firms and stablecoin issuers need documented innovation cases that survive stability scrutiny. Incumbent banks need to decide whether to contest, partner, or acquire against a supervisor now formally instructed to consider competitive dynamics. Legal and public affairs functions should be preparing submissions that speak the language of the new objective before the first annual report sets the reference points.

The Bank has been given a growth lever it did not previously hold in payments. How firms frame their asks over the next twelve months will shape how that lever gets pulled.