Treasury sets new remit for BoE's FMI Committee on growth and innovation
HM Treasury has issued a letter to the Bank of England's Financial Market Infrastructure Committee, outlining recommendations to support the government's growth mission. The letter, dated July 1, 2025, emphasizes facilitating innovation and proportionate regulation for Financial Market Infrastructures.
Driving Growth Through FMI Innovation
Chancellor Rachel Reeves MP has outlined the government's "growth mission," emphasizing the UK financial services sector's fundamental role as an engine for economic expansion.
The letter to Bank of England Governor Andrew Bailey stresses the need for proportionate and effective regulation to foster a stable and attractive environment for businesses.
The Bank, as the UK's regulator for Financial Market Infrastructure (FMI) firms like Central Clearing Counterparties (CCPs) and Central Security Depositories (CSDs), plays a critical role in supporting the financial system.
While the Bank's primary objective is to protect and enhance UK financial stability, its secondary objective is to facilitate innovation in FMI services.
The Treasury urges the Bank to consider how it can best support the growth mission, ensuring FMIs efficiently support UK capital markets and the wider economy.
This involves updating regulatory frameworks to be robust, safe, proportionate, and well-targeted.
Cultivating a Dynamic Digital Ecosystem
The letter explicitly calls for the full embedding of the secondary objective to facilitate innovation in FMI services.
It acknowledges the Bank's work on the Digital Securities Sandbox (DSS) and the move towards T+1 settlement, welcoming consideration of stablecoins within the DSS.
The Treasury deems it imperative that the Bank actively facilitates innovation across its policymaking for CCPs and CSDs, identifying this as a key pillar of the forthcoming financial services growth and competitiveness strategy.
Specific recommendations include active engagement with both incumbent and new entrant FMIs to encourage innovation, streamlining administrative burdens for firms while maintaining high regulatory standards, and continued UK leadership in international regulatory forums.
A Clear Mandate for Innovation
This letter from HM Treasury provides a clear, growth-focused mandate for the Bank of England's FMI Committee.
It underscores the government's expectation for active innovation facilitation, moving beyond mere stability.
While the emphasis on growth is strong, the Bank's primary financial stability objective remains paramount, creating a delicate balancing act.