Bank of England Deputy Governor Breeden outlined the vision for tokenization and stablecoins, revealing plans to release a draft of systemic stablecoin regulations next month.

BlockBeats News, May 20th - Sarah Breeden, the Bank of England's Executive Director for Financial Stability, stated at the City Week 2026 conference in London that the central bank's future strategy will focus on tokenization to modernize the UK's financial system. She noted that the future retail payment system should include various interchangeable forms of currency, including tokenized deposits and stablecoins, with distributed ledger technology expected to reduce payment costs, increase speed, and reduce intermediaries.

Breeden proposed that an ideal multi-currency system should promote competition and choice—beyond traditional bank deposits, the public should be able to use tokenized deposits, regulated stablecoins, and potential retail central bank digital currency (CBDC) for payments.

In terms of specific steps, the Bank of England plans to release a draft of rules for systemic stablecoins next month and finalize them by the end of this year. To mitigate early risks from rapid adoption, the central bank may set a temporary cap on the total issuance of stablecoins. Breeden also mentioned encouraging banks to adopt new technologies in their currency issuance and ensuring that tokenized deposits can be used in interbank payments, not just limited to a bank's own customers.

Furthermore, the Bank of England will continue to support the UK government's pilot tokenized sovereign bond "Digital Gilt" plan and will announce the conclusion of the CBDC project design phase later this year. Breeden stated that the current task is for regulators, the government, and the industry to work together to deepen the UK's tokenized financial ecosystem on the existing strong foundation.