tl;dr
Sasha Mills, a senior Bank of England executive, emphasized that tokenization and stablecoins can support the future financial system if properly regulated. At City Week 2025, she described the BoE's vision of a mixed digital ecosystem integrating tokenization, stablecoins, and distributed ledger te...
A leading Bank of England (BoE) executive, Sasha Mills, emphasized how tokenization and stablecoins can underpin the next financial system, provided there is proper regulation and support. Speaking at City Week 2025, Mills outlined the BoE's vision of building a “mixed ecosystem” digital financial system that integrates tokenization, stablecoins, and distributed ledger technology (DLT) alongside existing frameworks.
Mills highlighted that current financial market information flows remain largely “analogue” despite the digital age, with processes often centered on outdated “end of day” timings incompatible with a 24/7 global market. She advocated for a digital financial system that leverages new technologies while coexisting with traditional ones, citing the BoE’s pioneering onboarding of a DLT-based private payments operator, Fnality, and the creation of the Digital Securities Sandbox (DSS) to foster innovation in securities trading and settlement.
Tokenization, she explained, is essential to this future system. By digitally representing assets on programmable ledgers, tokenization can remove operational hurdles, deepen markets, unlock new opportunities, and facilitate fractional ownership. Mills pointed to tokenized deposits as a promising innovation enabling real-time, on-chain settlement while maintaining traditional banking protections and credit-creation capacity.
On stablecoins, the BoE plans to consult on a systemic stablecoin regime, following a discussion paper published in late 2023. While stablecoins remain unregulated in the UK, the BoE aims to implement forward-looking standards. Notably, the requirement for all backing assets to be held as unremunerated central bank deposits has been relaxed, allowing some backing assets to be invested in High Quality Liquid Assets (HQLA) to foster innovation and maintain confidence.
Mills also mentioned proposed holding limits for systemic stablecoins—around £10,000-20,000 for individuals and £10 million for businesses—to help the financial system adjust to digital money. She portrayed the BoE as “open-minded” about stablecoins’ role in supporting wholesale market innovation, though central bank money remains the primary settlement asset.
Despite her optimism, Mills cautioned that the transition to faster and cheaper settlement systems requires preserving trust and confidence, essential pillars of financial stability. She warned that without certainty of final settlement, the system risks cascading failures, underscoring the need for regulatory frameworks upholding “same risk, same regulatory outcome” while encouraging innovation.
In conclusion, Mills urged collaboration between the BoE and industry to move beyond technological potential and demonstrations toward delivering a new generation of the financial system, reinforcing London’s position as a global financial hub.