Breeden outlines UK vision for tokenised money and markets
Sarah Breeden, Deputy Governor for Financial Stability at the Bank of England, outlined the UK's vision for modernising money and markets through tokenisation. She emphasized enhancing financial stability and supporting sustainable growth in both retail payments and wholesale finance.
Tokenisation's dual promise for UK finance
Breeden highlights tokenisation's potential to transform UK finance, supporting financial stability and sustainable growth.
The vision includes a robust, multi-money retail payments system promoting competition among traditional bank deposits, tokenised deposits, regulated stablecoins, and potentially a retail central bank digital currency.
For wholesale financial services, the aim is a multi-asset, multi-currency ecosystem with dynamic, resilient markets in tokenised real-world assets like equities and bonds.
This approach seeks to lower costs, improve functionality, and enhance efficiency across the trade lifecycle, from issuance to collateral use.
The Bank of England, in collaboration with the FCA and government, is building foundations to deepen the tokenised finance ecosystem.
Building the digital rails for adoption
The Bank of England, with HM Treasury and the FCA, is actively implementing this vision.
Key initiatives include a new public-private partnership for next-generation retail payments infrastructure, with a design consultation imminent.
For systemic stablecoins, the Bank will publish draft rules next month and finalize them by year-end, considering feedback on transitional limits.
The Prudential Regulation Authority (PRA) reaffirmed expectations for banks to innovate in tokenised deposits.
In wholesale markets, the Digital Securities Sandbox (DSS), launched in 2024, enables live trading and settlement of tokenised securities under a modified regulatory framework.
UK's tokenisation blueprint takes shape
This speech marks a significant step in the UK's journey towards a tokenised financial system, providing a clear blueprint for future development.
The pragmatic, multi-money approach, coupled with the Digital Securities Sandbox, positions the UK as a leader in fostering responsible innovation.
However, the ambitious timeline and inherent complexities of cross-border regulatory harmonisation will test the collaborative spirit of authorities and industry alike.
Source: Sarah Breeden: Modernising money and markets
IN: