Digital Pound Faces No Rush as Bank of England Deputy Highlights Stablecoin Alternatives

Bank of England Deputy Governor for Financial Stability Sarah Breeden stated on 12–14 October 2026 that the central bank sees no immediate need to launch a retail central bank digital currency. Speaking at an Atlantic Council event held during the IMF and World Bank annual meetings in Bangkok, she questioned whether central bank money must lead innovation in payments and settlement.

Breeden noted that regulated pound-denominated stablecoins and tokenised commercial bank deposits could deliver similar benefits to households and businesses. She emphasised the importance of building successful sterling stablecoins to support innovation in the domestic currency and limit reliance on dollar-pegged instruments.

Breeden Outlines Conditions for Digital Pound

The deputy governor framed the decision around functional outcomes rather than a predetermined timeline. She asked whether the advantages of tokenisation and programmability could be achieved through existing or near-term private-sector solutions backed by appropriate regulation. This approach leaves open the possibility that a retail digital pound might not be required if other forms of money meet policy objectives.

Breeden’s comments come while the Bank and HM Treasury complete the design phase that began in 2023. A blueprint, conclusions and joint assessment are scheduled for later in 2026. Any subsequent build or launch would require primary legislation, a step that has not yet been taken.

She also pointed to ongoing upgrades to the Bank’s Real-Time Gross Settlement system. These changes aim to support tokenised transactions and near-24/7 settlement while preserving central bank money as the ultimate settlement asset. The upgrades are intended to keep the monetary system adaptable regardless of which instruments gain adoption.

Stablecoin Regime Nears Finalisation

In June 2026 the Bank published a policy statement and draft Code of Practice for systemic stablecoin issuers. Feedback closed in September and final rules are expected by the end of 2026, potentially allowing operations from 2027. The regime includes a requirement that 70 percent of reserves be held in interest-bearing assets and sets a temporary £40 billion issuance guardrail for each systemic stablecoin.

Current market data show pound-denominated stablecoins account for less than $6 million of the roughly $308 billion global stablecoin market recorded at the end of 2025. Breeden argued that strengthening the sterling stablecoin sector would support a “multi-money” ecosystem in which cash, deposits, tokenised deposits and regulated stablecoins remain interchangeable at par.

The Bank continues to monitor developments in wholesale tokenisation and cross-border payments. It has stressed that any new forms of money must meet standards for safety, liquidity and interoperability with existing payment rails.

Next Milestones for UK Digital Money Policy

Regulators will publish final stablecoin rules by December 2026. The digital pound design conclusions and blueprint due later this year will inform whether the project moves beyond the current assessment stage. No decision has been taken on a build phase.

Market participants and payment service providers can review the Digital Pound Lab Phase 2 Update for details on the ongoing technical work. The Bank has indicated that further public consultations will accompany any legislative proposal.