BoE deputy: Tokenized assets could cut costs, boost competition

At London’s City Week on Tuesday, Bank of England Deputy Governor Sarah Breeden described tokenization as the representation of assets and money on digital ledgers and said it could lower costs, speed settlement and increase competition if trust and interoperability are preserved.

Breeden told attendees the Bank is working with industry, government and other regulators to design a framework that supports innovation without undermining financial stability.

“In addition to traditional bank deposits, people should be able to pay with tokenized bank deposits, regulated stablecoins and, potentially, a retail central bank digital currency (CBDC),” she said in a transcript of the remarks, adding that central bank money will remain the monetary system’s foundation.

The Bank of England on Monday proposed extending operating hours for its core settlement infrastructure to near 24/7 availability. The proposal aims to support cross-border payments and securities settlement as tokenization and other digital asset technologies develop and to reduce friction for businesses and consumers using tokenized assets.

Officials are also reviewing the Bank’s approach to pound-sterling stablecoins, including whether to relax limits on how much consumers can hold. Bank officials have stepped up engagement with industry groups and revisited earlier plans that would have required stricter reserve and backing rules for stablecoins.

The Bank’s CBDC Academic Advisory Group said in January that a retail CBDC is not strictly required to preserve a uniform monetary system but could provide support as cash use declines and electronic payments expand. Regulators have stressed that any tokenized deposits, regulated stablecoins or a potential CBDC must operate under clear rules to protect consumers and preserve market stability.

Breeden and the Bank said any changes to infrastructure or regulation would be implemented alongside existing safeguards and in cooperation with other authorities to ensure systems can interoperate and markets remain orderly.