Bank of England Deputy Says Central Bank Will Be 'the Banker to the Stablecoin' Under £40 Billion Cap

A Bank of England deputy has said the central bank will be "the banker to the stablecoin." It is an unusually warm line from an institution that has spent years warning about private digital money.

The remark builds on a policy statement the Bank published on June 22, 2026, along with a draft Code of Practice for systemic stablecoin issuers. Those documents are the working blueprint for how sterling stablecoins that reach systemic scale will be regulated.

What the Bank changed

The Bank said it made "targeted revisions" to last year's proposals after what it called extensive engagement with industry.

Two changes stand out.

First, the reserve rules. The maximum share of backing assets that can sit in interest-bearing short-term UK government debt rises from 60% to 70%. The rest must be held as deposits at the central bank.

The Bank says those deposits are what let issuers meet redemptions promptly. It says the higher gilt share "supports more viable business models while still allowing issuers to deal with outflows."

Second, the limits on users. Last year the Bank floated temporary caps on how much of a stablecoin households and businesses could hold. Those are gone.

In their place is a temporary issuance guardrail on each systemic stablecoin, initially set at £40 billion. The Bank says this "delivers the same policy outcome, while being cheaper and easier to implement, and allowing unrestricted use by household and businesses."

The guardrail will be reviewed regularly. The Bank says it will be removed once risks to credit provision have been addressed.

Why the cap exists

The stated worry is credit. If large volumes of bank deposits migrate into stablecoins, lenders have less funding to make loans. The Bank says the guardrail is meant to "safeguard the economy's access to credit."

The cap moves the restriction from the customer to the issuer. Someone holding a sterling stablecoin would face no personal limit. The ceiling would apply to how big any single coin can get.

The central bank's role

The split in reserves is where the "banker" language becomes concrete. Gilts earn interest, which is how an issuer makes money. Central bank deposits are the cash-like layer that backs redemption if holders rush for the exit.

Deputy Governor for Financial Stability Sarah Breeden described the package this way: "Innovation thrives on trust. And today we've set out the foundations of that trust for a new form of money, with prompt redemption, strong protections and central bank support. This is truly a world leading regime."

The Bank called the framework a way to let UK-issued stablecoins develop "as trusted forms of digital money." It cited possible gains in speed, cost and cross-border payments.

The Bank is also working with the Financial Conduct Authority on what it calls an end-to-end regime, including a managed transition as firms grow from non-systemic to systemic. It said further detail will come alongside the FCA's final rules.

Timeline

Nothing here is live. The Bank asked for feedback on the draft Code of Practice by September 22, 2026, a deadline that has now passed. It intends to finalize the Code by the end of 2026. Stablecoin operations under the regime are slated to begin from 2027.

Separately, HM Treasury has announced plans to give the Bank a secondary objective of promoting innovation in payment systems and new digital forms of money. Financial stability stays the primary remit, according to the government. The change is to be made through amendments to the Financial Services and Markets Bill.

That objective is not a licence. No stablecoin issuer has been authorized by it, and no individual provider is brought under Bank supervision by it. What decides the market outcome is the FCA rulebook, how systemically important providers are treated, and the 2027 start date.

What is still unsettled

The £40 billion figure is explicitly temporary, but the Bank has not set a date for removing it. Its condition is that risks to credit provision be addressed, and the Bank will judge that itself through regular reviews.

The Bank has also not said which issuers, if any, expect to reach systemic scale or when. The final Code of Practice and the FCA's rules, both due by the end of 2026, will show how much of the draft survives and what "central bank support" means for issuers in practice.