In a recent address during Digital Assets Week in London, Sasha Mills of the Bank of England discussed the evolving landscape of digital assets and payments, highlighting both the opportunities and risks these innovations present in achieving the Bank’s monetary and financial stability objectives.
Mills expressed her enthusiasm for participating in the event, emphasising the collaboration between the City of London, a global financial hub, and the UK’s dynamic fintech sector. She pointed out that innovations in digital assets are crucial to the central bank’s mission, as they play a significant role in maintaining public trust in money.
“The speed at which certain markets and activities become systemic may outpace the ability of policymakers to build infrastructures and frameworks to respond,” Mills warned. She underscored the necessity for the Bank to adapt to changing technological landscapes to ensure the safe implementation of digital assets and payments.
One of the key initiatives highlighted by Mills is the Bank’s Digital Securities Sandbox (DSS), launched earlier this week in collaboration with the Financial Conduct Authority. This regulatory environment aims to facilitate the creation and trading of digital securities, allowing innovators to explore new technologies such as programmable distributed ledgers while ensuring the safety of the financial system.
Mills stated, “In a tokenised world, firms are effectively working from the same data. This standardisation could enhance the efficiency of reconciliation, trading, and settlement processes, ultimately benefiting market participants.” However, she cautioned that the implementation of such technologies must be approached with care, as the application of programmable ledgers in critical financial markets is still relatively new.
The DSS aims to provide a safe environment for startups and existing firms alike, allowing for the exploration of innovative business models. Mills noted that by gathering feedback from the industry, the Bank can shape a regulatory regime that supports sustainable innovation without compromising financial stability.
In addition to the DSS, Mills addressed the Bank’s ongoing initiatives in wholesale payments, including enhancements to the renewed Real-Time Gross Settlement (RTGS) service. This initiative aims to ensure that central bank money remains the preferred settlement asset, which is crucial for maintaining financial stability in the face of emerging private settlement assets.
Mills concluded her remarks by reiterating the Bank’s commitment to promoting the good of the people of the United Kingdom through maintaining monetary and financial stability. She called for continued engagement with the industry as the Bank navigates the evolving landscape of digital assets and payments.
The speech underscores the Bank of England’s proactive approach to harnessing the potential of digital assets while safeguarding the integrity of the financial system, marking a significant step forward in the regulation of this rapidly advancing sector.