The Bank of England is weighing changes to its stablecoin rules and settlement systems to make room for tokenized assets. A deputy governor said tokenization could cut costs and increase competition, but warned that digital money must remain trusted and work across different platforms.
Why tokenization is on the table
Tokenization — the process of issuing digital representations of traditional assets on a blockchain — has drawn attention from central banks globally. The Bank of England's deputy governor said the technology could reduce costs and open up competition in financial markets. But the central bank made clear that any shift to tokenized money would require strong guardrails.
Trust and interoperability come first
The Bank of England stressed that digital money, whether from a central bank or private issuers, must be trusted and interoperable. That means users should be able to move funds between different systems without friction. The deputy governor said the central bank is focused on ensuring tokenized money meets those standards before any broader rollout.
Stablecoin reforms in the works
Regulators are considering changes to how stablecoins are overseen. The Bank of England wants to bring these private digital currencies under the same safety and soundness rules that apply to traditional payments. The exact shape of those reforms hasn't been announced, but the central bank said it's looking at how to align stablecoin regulation with its broader digital money strategy.
Near-24/7 settlement on the horizon
The Bank of England is also exploring near-24/7 settlement for wholesale transactions. That would allow tokenized securities and other digital assets to settle outside normal banking hours. The deputy governor said such a system could support tokenized markets by reducing delays and making capital move faster. But the central bank hasn't set a timeline for when that system might launch.
The Bank of England continues to study these proposals. No date has been given for when stablecoin reforms or the new settlement system will be finalized.
