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Coin Geek
09-07-2025
- Business
- Coin Geek
BoE sees tokenization, stablecoins relative to financial system
Getting your Trinity Audio player ready... A leading Bank of England (BoE) executive has pointed to how tokenization and stablecoins can help provide the foundation of the next financial system, with the appropriate regulation and support in place. Sasha Mills, executive director of financial market infrastructure at the BoE, gave a speech discussing building a 'mixed ecosystem' digital financial system featuring tokenization, stablecoins, and distributed ledgers alongside the existing system. Speaking at City Week 2025 in London on July 2, Mills praised the benefits afforded to financial markets by tokenization and stablecoins, while outlining the BoE's view of digitization more broadly. BoE wants new structures Mills noted that the way information flows around the financial system has largely remained unchanged in the modern age—an 'analogue market' in a digital world. For example, many of the processes that undergird the financial system are still centered around an 'end of day' that is 'increasingly at odds with a 24/7 global financial system.' Mills suggested that the solution is 'building a digital financial system that realises the benefits of new technologies, coexists with existing technologies, and supports innovation.' One such solution is having a 'digitally compatible or digitally native means of payments with minimum credit, market and liquidity risk.' In this regard, she pointed to the BoE as the first central bank to onboard a distributed ledger technology (DLT)-based private payments operator in Fnality. Mills also highlighted the United Kingdom's Digital Securities Sandbox (DSS)—created to facilitate the use of developing technology such as DLT in issuing, trading, and settling securities—as an example of the BoE exploring and allowing for new market structures. One notable use case to come out of the DSS thus far is the U.K. government's Digital Gilt pilot (DIGIT), which will issue government debt on a distributed ledger. According to Mills, examples such as this have led to an uptick in 'new entrants and incumbents alike entering the [DSS] regime.' She went on to say that the BoE sees the digitalization of wholesale financial markets 'as a way to improve their function and efficiency through the use of new and innovative approaches to technologies and using data.' One such innovative approach is tokenization. Tokenization is the future Tokenization is the digital representation of financial assets using DLT, the underlying technology behind blockchain. In her speech, Mills highlighted how some firms are exploring tokenization to make moving assets around the financial system more straightforward by removing operational and technical barriers. 'Tokenisation of assets and smart contracts on programmable and shared ledgers can deepen existing markets, unlock new ones, and change how asset classes, capital, and balance sheets can be mobilised within the financial system,' said Mills. 'UK authorities need to legitimise the utility of tokenised assets and payments to safely support growth in the financial system.' She gave the example of 'intraday repos'—transactions that open and close on the same day, with the participants specifying the opening and closing times—as an area where tokenization can provide value. Another is tokenized deposits—digital representations of commercial bank money recorded on programmable ledgers, which are emerging as a promising innovation within the regulated banking system. According to Mills, banks are considering tokenized deposits to explore real-time, on-chain settlement while preserving the protections and credit creation capacity of traditional deposits. As David Bailey, executive director of Prudential policy at the BoE, noted in June, the central bank is actively exploring how tokenized deposits can integrate with initiatives like the DSS and the National Payments Vision to enable 'both incumbent and new firms to compete while ensuring that customers are able to use different forms of digital money with confidence.' In her speech, Mills also pointed out that asset tokenization can allow for the 'rationalization of processes and systems' by normalizing how asset classes are represented and allowing smaller portions of these assets to be mobilized, hinting at the benefits of fractional ownership that blockchain tokenization affords. Another blockchain-related topic that got significant airtime in Mills' speech was stablecoins. Supportive stablecoins regulation Mills noted that the BoE will be consulting on the U.K.'s systemic stablecoin regime, following up on a discussion paper on systemic retail stablecoins published in November 2023. Stablecoins remain unregulated in the U.K., but the country's top finance sector watchdog, the Financial Conduct Authority (FCA), recently ramped up efforts to produce a framework for the asset type. This proposed framework, while not finalized, would place so-called 'systemic stablecoins'—stablecoins considered large enough to be of potential risk to the broader financial system—under the purview of the BoE. When it comes to the BoE's regime, Mills said 'it's important to emphasise that when designing the Bank's proposed requirements, we tried to be forward-looking and consider what standards stablecoins would need to meet.' In somewhat of a U-turn, one standard that stablecoins apparently no longer need to meet is that all of the backing assets have to be invested in unremunerated central bank deposits—money that banks are required to keep at the central bank, but don't earn any interest on. According to Mills, despite the BoE initially proposing this requirement, in consultation, it was found that it 'would not result in a viable business model.' Instead, she said, the BoE is now 'minded to allow for a proportion of backing assets to be remunerated,' by allowing a proportion of backing assets to be invested in 'High Quality Liquid Assets (HQLA).' According to Mills, the BoE believes this will support innovation in the U.K. while maintaining confidence in money and allowing for a smoother transition from FCA to central bank requirements within the future U.K. stablecoin regime. Furthermore, she confirmed that the BoE was considering introducing holding limits for systemic stablecoins, likely to be around £10,000-20,000 (around $13,000-$27,000) for individuals and £10 million (around $13 million) for businesses. These limits would be transitional and allow the financial system to adjust to new forms of digital money. However, Mills said the BoE was still engaging with the industry and listening to feedback, so these proposals have not been finalized. Relatedly, in another uncharacteristic embracing of stablecoins, Mills said the BoE was 'open-minded' to stablecoins being able to provide innovation that could also be useful for wholesale markets. 'The Bank has always been clear that central bank money should be the primary settlement asset in the financial system, and we are innovating central bank money to ensure this remains the case,' she said. However, she went on to say that the BoE was 'considering the role that stablecoins could play in supporting innovation in the Digital Securities Sandbox.' Mills said the central bank will publish further information on this later in the year. Warnings from the past Among her praise and optimism for all things digitization, Mills also cautioned that while the foundations provided by the BoE's current efforts are solid, particularly with regard to tokenization and stablecoins, much still needs to be done to graduate to a financial system that can deliver faster and cheaper settlement. She also pointed to the hard learnt lessons of the past that have taught how a financial system is only as good as people's trust in it. 'Money requires confidence to support economic activity and growth in good times and bad. A lack of trust in money speaks to financial instability, as we've seen countless times in history,' said Mills. 'Participants in real economy and financial transactions require certainty that settlement is final… Without that, we might see cascading failures in leveraged markets.' Thus, any new system or ecosystem built on innovative technology should have the protection of these principles at its core, if it is to maintain financial stability, 'adhere to same risk, same regulatory outcome and give space to innovators to compete to deliver solutions. That is what we are here to ensure,' said Mills. Concluding her comments to the City Week event, the BoE's executive director of financial market infrastructure said that the central bank wants to continue working with industry to 'start building on the foundations we, and others, have put in place.' She added that 'it is time to move away from talking about potential and one-off demonstrations of the technology, and for all of us to start working together to deliver a new generation of the financial system that is befitting of London's place as the heart of the global financial system.' Watch: Richard Baker on engineering a smarter financial world with blockchain title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen>
Associated Press
26-06-2025
- Business
- Associated Press
CITY WEEK 2025 – Where the International Financial Services Community Meets
LONDON, ENGLAND, UNITED KINGDOM, June 26, 2025 / / -- More than 1,000 top-level senior decision-makers from UK and overseas financial institutions will be descending on London to attend City Week 2025 – the 15th International Financial Services Forum, which will take place on 30 June – 2 July 2025 at the Royal Garden Hotel in London. Organised under a partnership between the UK Government's Department for Business and Trade, the City of London Corporation, TheCityUK, UK Finance and City & Financial Global, the forum is widely regarded as the premier gathering of the international financial services community. The programme reflects the boardroom agendas of leading financial institutions from across the world and comprises three separately bookable summits: 30 June – Day One The Net Zero Finance Innovation Summit It explores how to reconcile the competing requirements of a pro-growth agenda, energy security and net zero against the backdrop of a rapidly warming planet. The case for the energy transition and decarbonisation is overwhelming for purely economic reasons. Against this background, this day brings together government ministers, regulators and leaders of financial institutions from across the world to discuss the huge opportunity that financing energy transition and decarbonisation presents, as well as the latest innovations in financing net zero. Speakers include: Emma Reynolds MP, Economic Secretary to the Treasury and City Minister, HM Treasury; Rt Hon Jonathan Reynolds MP, Secretary of State for Business and Trade; Astrid Schomaker, Executive Secretary of the UN Convention on Biological Diversity; Tim Adams, President and CEO, The Institute of International Finance; and Juergen Maier, Chair, Great British Energy Sir Douglas Flint CBE, Chair, abrdn. 1 July – Day Two The AI and Digital Innovation Summit This summit explores the real-world applications of Gen AI for financial institutions and the huge potential for the industry of the next phase of AI, Agentic AI. It will also provide a detailed analysis of all the related issues, including regulation, data governance, AI infrastructure, the impact on financial markets and specific financial products, international developments and risk management. Top AI experts will share their insights, global regulators will discuss emerging AI regulation and financial services leaders will discuss current and future AI applications. Speakers include: Rt Hon Peter Kyle MP, Secretary of State for Science, Innovation and Technology; Darren Hardman, CEO, Microsoft UK; Leon Butler, General Manager, UK and Ireland, IBM; Zahra Bahrololoumi CBE, CEO, Salesforce UK and Ireland; and Vishal Marria, CEO and Founder, Quantexa 2 July – Day Three The Digital Assets Innovation Summit Digital assets, tokenisation and cryptocurrencies are developing quickly. The U.S. is very supportive of crypto, while the UK and other jurisdictions are establishing their own regimes. The tokenisation of financial assets through distributed ledgers and blockchain will shift the way that assets are managed and leveraged, while digital assets will transform the way that capital and financial markets work. This international summit brings together innovators and traditional financial firms to map out the future of financial markets and the challenges ahead. Speakers include: The Honorable Caroline D. Pham, Acting Chairman, U.S. Commodity Futures Trading Commission; Hester Peirce, Commissioner, US Securities and Exchange Commission; Sarah Pritchard, Executive Director, Financial Conduct Authority; Sasha Mills, Executive Director, Financial Market Infrastructure, Bank of England; Ryan Hayward, Head of Digital Assets and Strategic Investments, Barclays; and Dr Robert Oleschak, Advisor and Member of the Management Board, Swiss National Bank Packed with high-level keynote addresses and thought-provoking panel discussions, the speakers at the three summits include a list of over 100 well-known names from the global financial services industry, the world of politics and the international regulatory community. A full list of speakers and the event programme can be found at Maurice Button, Chief Executive of City Week, said: 'At a time of significant change in geopolitics, international trading patterns and potentially the global financial architecture, City Week offers delegates a unique opportunity to hear the insights of 100+ eminent speakers drawn from the international financial services industry on financing net zero, the AI revolution and the emergence of digital assets and crypto into the mainstream of financial services.' Please confirm your attendance by email (indicating which Summit you wish to attend). If you would like to interview any of the speakers ahead of or during the event, please let us know and we will be delighted to assist you. Notes for Editors City Week is the leading forum for the international financial services community. Taking place in person and with virtual access, City Week 2025 will build on the success of previous editions of the event, all of which have attracted over 1,000 delegates from more than 60 countries around the world. It will consist of three summits, social events and networking opportunities, with a strong focus on the latest developments in financing net zero, the impact of AI on the financial services industry, and tokenisation and institutional adoption of digital assets. Attendance is by invitation only and the majority of the delegates are CEOs and main board directors of the world's largest banks, investment managers and insurance companies. The balance is made up of senior representatives from international regulators, national treasury departments and multinational corporations that use international financial services. Paul Hooper City & Financial Global email us here Visit us on social media: LinkedIn YouTube X Legal Disclaimer: EIN Presswire provides this news content 'as is' without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
