The Bank of England (BoE) has issued a discussion paper inviting views on its approach to innovation in money and payments. In the paper, the BoE notes that to date it has:
- enhanced its capability to supply wholesale central bank money for settlement;
- taken steps to ensure a ‘safe innovation’ regulatory environment for the development of tokenised assets, including by setting up a Digital Securities Sandbox in partnership with the Financial Conduct Authority;
- set out its proposed approach to new forms of private digital money, such as tokenised deposits and stablecoins; and
- carried out work to explore a retail central bank digital currency, a banknote in digital form.
The paper describes the BoE’s proposed future approach taking into consideration the payments landscape in the round: retail and wholesale payments; central bank, commercial bank and other privately issued money; and domestic and international contexts. It sets out BoE’s:
- financial stability risk appetite for wholesale settlement in central bank money;
- approach to exploring innovations in wholesale central bank money;
- expected outcomes it is seeking in the retail payments landscape, in order to deliver trust and confidence in money; and
- plans for engaging with international partners to consider how the respective payments landscapes can interoperate in a way that reduces frictions to cross-border payments, while managing the potential risks from this to international monetary and financial stability.
Specific questions the BoE is seeking views on are set out in the paper. Responses will be accepted until 31 October 2024.