The Bank of England will be set a new official objective of boosting innovation in digital currencies and payments, signalling ministers want the central bank to promote the UK as a hub for stablecoins. The Treasury is giving the central bank a legal “secondary objective” to support innovation in payment systems and digital money, ensuring the UK’s regulatory system keeps pace with the digital asset market.

The move follows criticism from crypto companies over the BoE’s conservative approach. It reflects a wider push by the bank and Financial Conduct Authority to oversee digital asset markets. Traditional banks and asset managers are increasingly exploring blockchain technology to modernise systems and reduce costs.

Lucy Rigby, the City minister, said developments such as tokenisation and distributed ledger technology should transform global financial markets. “Whilst financial stability will always remain the bank’s primary objective, this secondary objective will support the bank to continue to drive innovation in payments and digital finance,” she said.

The BoE has laid out stablecoin rules, replacing ownership limits with a £40bn issuance cap. The new statutory objective will be enacted via an amendment to the Financial Services and Markets Bill, debated in the House of Lords in September. Sarah Breeden, deputy governor, said the move would “further boost” the central bank’s work to enhance innovation.