No rush hour: Bank of England says the digital pound can wait on sterling stablecoins
The Bank of England's Deputy Governor for Financial Stability, Sarah Breeden, has signaled there is no urgency to launch a UK central bank digital currency (CBDC), telling an Atlantic Council event on the sidelines of the IMF and World Bank Annual Meetings in Bangkok that regulated sterling stablecoins and tokenised bank deposits may deliver the same benefits a retail digital pound was designed to provide.
The remarks come as the Bank and HM Treasury approach the end of the digital pound design phase, which has run since 2023 without a decision on whether to proceed.
Breeden questioned whether central bank money needs to lead at all, asking:
Does it necessarily have to be central bank money that takes the lead?
She noted that the share of UK transactions settled in central bank money has fallen from two-thirds to 8%, and said reliance on dollar-denominated stablecoins was "madness," adding that she wants the same kind of innovation to be possible "in our national currency."
The multi-money model
The Bank's official position, set out on its digital pound progress page, is that "no decision has been made" and that a CBDC is "one option within a broader, diverse multi-money ecosystem" that should also include cash, commercial bank deposits, tokenised deposits and systemic stablecoins, all exchangeable at par. The Bank is separately upgrading its real-time gross settlement (RTGS) system to support 24/7 settlement in central bank money for financial market transactions, regardless of which way the CBDC decision falls.
That ecosystem is thin on the sterling side for now. Pound-denominated stablecoins held under $6 million of a roughly US$308 billion global stablecoin market as of late 2025, a gap the Bank's regulatory settings are aimed squarely at. On 22 June 2026, the Bank published a policy statement and draft Code of Practice for systemic sterling stablecoins, dropping its earlier proposed holding caps in favour of a temporary £40 billion issuance cap per coin.
Key features include:
issuers may hold up to 70% of backing assets in short-term UK government debt, with the remaining 30% as non-interest-bearing deposits at the Bank;
redemptions must clear within 24 hours; and
issuers are prohibited from paying interest to coin holders.
HM Treasury, not the Bank, will determine which stablecoins meet the "systemic" threshold that triggers this regime. The consultation on the draft code closed on 22 September 2026, with the final version expected by the end of the year, alongside the Bank and Treasury's joint decision on the digital pound itself.
What now?
UK-facing payments, banking and digital asset businesses should:
track the end-of-2026 joint Bank/Treasury announcement on the digital pound, which will arrive alongside the finalised blueprint and a joint assessment of next steps;
assess whether a sterling stablecoin offering could fall within HM Treasury's "systemic" designation, which would trigger the Code of Practice's reserve, redemption and interest-payment constraints;
note that the Bank has confirmed a digital pound would require primary legislation before introduction, and that neither the Bank nor government would be able to programme it or restrict how it is spent, addressing a recurring public concern; and
watch for interoperability requirements as the Bank's RTGS upgrade and any eventual CBDC are designed to sit alongside tokenised deposits and stablecoins rather than displace them.
The UK's posture now sits closer to the United States, where CBDC proposals have stalled amid hostile political positions and stablecoin regulation under the GENIUS framework has taken the lead, than to the European Central Bank, which continues to press ahead on a digital euro on a published timeline. Whether a multi-money system of cash, tokenised deposits and regulated stablecoins can interoperate as smoothly in practice as the Bank's design suggests on paper remains untested at scale.
