BoE backs a "multi-money" payments future combining tokenized deposits, regulated stablecoins and a possible digital pound
The Bank of England is reinforcing its view that the UK's future retail payments landscape should support multiple forms of money operating in parallel: traditional bank deposits, tokenized bank deposits, regulated stablecoins and, potentially, a retail central bank digital currency. Speaking at City Week 2026, Deputy Governor Sarah Breeden described the goal as a "multi-money system", arguing that distributed ledger technology and smart contracts can lower costs, reduce reliance on intermediaries and enable automated, conditional payments.
Breeden said the retail payments system should be designed to promote competition and consumer choice between "robust forms of money", rather than centring on a single instrument.
On stablecoins, the Bank said it plans to publish draft rules for systemic stablecoins next month, with a final framework expected later this year. Officials indicated they may introduce temporary limits on total stablecoin issuance during early adoption to protect financial stability and reduce the risk of abrupt deposit outflows from banks.
On wholesale market tokenization, the BoE and the Financial Conduct Authority launched a joint consultation on May 18. The process seeks input from banks, trading venues, fintechs and asset managers on tokenized securities, collateral and settlement infrastructure, along with proposed prudential treatment.
The Bank-FCA Digital Securities Sandbox, launched in 2024 and running through January 2029, is also expanding. Breeden said 16 firms are preparing to roll out live services for tokenized issuance, trading and settlement from late 2026. Participants include Euroclear, HSBC and London Stock Exchange Group.
Regulators are assessing how tokenized assets could be used as collateral at central counterparties and within the Bank's own operations. The BoE has proposed extending RTGS and CHAPS operating hours, with a longer-term objective of moving toward near-24/7 settlement.
On capital and risk rules, the Bank said tokenized assets held by UK banks would receive prudential treatment aligned with their non-tokenized equivalents when legal rights and risk profiles are the same.
Work continues on the government's Digital Gilt initiative, focused on tokenized sovereign bonds. The central bank also expects to publish conclusions from the digital pound design phase later this year.
Breeden's comments come as tokenization moves beyond pilots and firms press for clearer rulebooks covering tokenized bonds, equities, fund units and settlement systems. The May consultation reflects that demand. The BoE has already revisited elements of its earlier stablecoin proposals after pushback from digital asset companies.
Under proposals published in November 2025, initial transition limits would have included a £20,000 per-person cap on a single sterling stablecoin and an approximately $13.5 million cap for corporates, as well as a requirement that at least 40% of reserves be held as non-interest-bearing Bank of England deposits. Industry groups argued such restrictions could impede commercial scaling, saying compliance, interoperability and settlement efficiency should take priority.
International coordination remains a concern. Governor Andrew Bailey warned, via Reuters, that cross-border regulatory tensions could rise as other jurisdictions, particularly the U.S. through legislation such as the GENIUS Act, advance their own approaches to stablecoin oversight.
For banks, crypto firms and market infrastructure providers, the BoE's roadmap points to near-term priorities: participate in consultations, test services in regulated sandboxes, and prepare for expanded settlement windows and updated prudential expectations shaping how tokenized money and securities function in UK markets.
