LONDON, July 7, 2026 — The Bank of England’s Financial Policy Committee (FPC) has welcomed the central bank’s recently published framework for systemic sterling-denominated stablecoins, saying the regime is designed to support innovation while maintaining financial stability. The committee also highlighted the forthcoming joint regulatory approach from the Bank of England and the UK’s Financial Conduct Authority (FCA) for systemic stablecoin issuers, which it said will clarify the transition between the UK’s non-systemic and systemic stablecoin regimes.
The comments were published in the FPC’s record of its June 26 meeting, which assessed risks to the UK financial system and outlined the committee’s latest policy priorities. The committee said the framework includes calibrated backing asset requirements and temporary issuance guardrails intended to preserve financial stability while supporting innovation in digital payments.
Systemic stablecoin framework
The FPC welcomed the Bank of England’s publication on June 22 of its Policy Statement and draft Code of Practice for systemic sterling-denominated stablecoins. According to the committee, the framework is intended to support innovation, facilitate market entry and allow UK-issued stablecoins to develop as trusted forms of money without compromising financial stability.
The committee also said the forthcoming joint regulatory approach from the Bank of England and the FCA will provide additional clarity on how stablecoin issuers would transition from the UK’s non-systemic regulatory regime into the systemic framework as they grow in scale and importance.
Financial stability assessment
Beyond stablecoins, the FPC said vulnerabilities associated with elevated valuations across risky assets, sovereign debt markets and private credit have become more pronounced since its December 2025 Financial Stability Report. It also highlighted a substantial increase in leverage within equity markets alongside continued uncertainty stemming from geopolitical developments.
The committee said recent advances in frontier artificial intelligence have increased risks to financial stability through cyber and operational resilience channels. It warned that increasingly capable AI models could identify and exploit software vulnerabilities more rapidly, requiring financial institutions and financial market infrastructure operators to strengthen cyber resilience, vulnerability management and coordination with authorities and critical technology providers.
Capital framework reforms
The FPC reaffirmed its commitment to modernising the UK’s bank capital framework. The committee said it intends to work with the Prudential Regulation Authority on reforms designed to simplify capital requirements, improve the usability of regulatory buffers and make the leverage ratio framework more proportionate while maintaining consistency with international standards.
Among the planned measures are proposals to increase the proportion of releasable capital buffers during periods of stress and consult on changes to leverage ratio requirements for large UK banks. The committee maintained the UK countercyclical capital buffer at its neutral setting of 2%, concluding that the banking system remains appropriately capitalised and resilient despite elevated global risks.
Why it matters
The FPC’s latest assessment reinforces the Bank of England’s approach of supporting innovation in systemic stablecoins while maintaining financial stability. The forthcoming joint Bank of England-FCA regulatory approach is expected to clarify how issuers transition from the non-systemic to the systemic regulatory framework as they become systemically important.
The record also highlights how UK authorities are considering stablecoins, frontier artificial intelligence, cyber resilience and banking regulation within a broader financial stability framework. For digital asset firms operating or seeking to operate in the UK, the document offers insight into the regulatory priorities and systemic risks likely to shape future supervisory expectations.
