Sarah Breeden, Deputy Governor for Financial Stability at the Bank of England, laid out an ambitious yet measured roadmap for integrating tokenisation and digital innovations into the UK’s financial system. Emphasising responsible adoption, Breeden highlighted how shared ledgers, smart contracts, and atomic settlements could make payments faster, cheaper, and more functional while bolstering the City of London’s role as a global financial hub.
Rather than a radical overhaul, the speech focused on building on existing foundations. The Bank, in collaboration with the Financial Conduct Authority (FCA), government, and industry, has already advanced infrastructure and regulatory frameworks. Breeden stressed that the UK’s approach positions it competitively internationally, with recent commitments reinforcing this progress.
A Multi-Money Future for Everyday Payments
At the heart of the vision is a competitive “multi-money” retail payments system. Consumers and businesses could choose from traditional bank deposits, tokenised bank deposits, regulated stablecoins, and potentially a retail Central Bank Digital Currency (CBDC) – all seamlessly interchangeable so that “a pound is a pound, whoever issues it.”
This setup aims to foster innovation and lower costs through diverse technologies and business models, while avoiding “walled gardens” dominated by a few large players. Breeden painted practical examples: paying online with a stablecoin that only releases funds to the retailer upon delivery confirmation, or sending cross-border payments more quickly and affordably than today.
On the regulatory front, the Bank plans to publish draft rules for systemic stablecoins next month, with finalisation targeted by year-end. Feedback is being reviewed on mechanisms like transitional holding limits or issuance guardrails to manage risks to credit provision. Banks are encouraged to innovate with tokenised deposits, supported by new infrastructure, while stablecoins from banking groups must be issued from separate, insolvency-remote entities to minimise contagion risks.
Europe’s Parallel Push for Regulated Stablecoins
This UK momentum is mirrored in Europe, where a major bank-led consortium is advancing a regulated euro stablecoin. Qivalis recently announced that 25 new banks have joined, taking the total to 37 major European institutions. The group is preparing to launch a 1:1 backed native euro stablecoin in the second half of 2026, aimed at powering on-chain financial infrastructure across the continent.
A public-private partnership is advancing next-generation retail payments infrastructure, with the Bank chairing a new Retail Payments Infrastructure Board. Design consultations are imminent, followed by private-sector delivery.
Tokenisation in Wholesale Markets: Efficiency Gains Ahead
For financial markets, Breeden envisions a multi-asset, multi-currency tokenised ecosystem – extending to equities, bonds, funds, private assets, and more. Benefits include faster trade lifecycles, reduced intermediaries, automated smart contract processes for collateral and payments, and easier intraday monetisation of assets.
Key initiatives include the Digital Securities Sandbox (launched in 2024), which enables live trading and settlement of tokenised securities. Major players like Euroclear, HSBC, and London Stock Exchange Group are among those preparing launches later this year. The Bank is also modernising its own payments infrastructure for central bank money settlement and supporting privately issued money in wholesale transactions.
Yesterday, the Bank and FCA issued a Call for Input outlining the full programme, aiming for a collaborative roadmap by year-end with input from the newly appointed Government Wholesale Digital Markets Champion, Chris Woolard.
Balancing Stability, Innovation, and Growth
Breeden framed these developments as supportive of the Bank’s core financial stability mandate, while aiding its secondary objectives of innovation and growth. A system at the technological frontier reduces the risk of unregulated or offshore activities gaining systemic scale unchecked. At the same time, enabling responsible innovation can cut costs and enhance services for users.
She acknowledged uncertainties in technology adoption – some promised benefits may not materialise, while new opportunities emerge – but argued that proactive steps now maximise potential gains. The speech also touched on AI’s role, including agentic payments and trading, where the Bank is engaging on standards and risk mitigation.
What This Means for Businesses and Consumers
For small businesses, faster automated payments upon delivery could ease cash flow pressures from late payments. Corporates might gain flexible overnight investment options in tokenised securities with near real-time settlement. Global operations could benefit from smoother cross-currency collateral management.
Overall, the message is one of collaborative momentum: authorities have laid strong foundations, but industry must now scale pilots into production use cases to deliver tangible benefits.
As the UK navigates this digital evolution, Breeden’s speech underscores a pragmatic path – one that prioritises robustness and openness while harnessing technology to strengthen the financial system’s contribution to sustainable economic growth. Watch this space as consultations, rule finalisations, and sandbox activities unfold in the coming months.
