In her speech at Digital Assets Week in London, Sasha Mills, a senior official at the Bank of England (BoE), explored the impact of innovations in digital assets on the financial system. Mills emphasized how these innovations offer both opportunities and risks as the Bank works toward its objectives of monetary and financial stability.
She highlighted that the UK’s central bank is committed to understanding and supporting the adoption of digital assets and new technologies in a safe and regulated manner. A key focus of this approach is ensuring that the evolving payments landscape maintains the singleness of money, which is foundational to the financial system’s trustworthiness.
One of the most critical initiatives highlighted in her speech was the launch of the Digital Securities Sandbox (DSS). This joint effort between the BoE and the Financial Conduct Authority (FCA) provides a regulated environment for financial innovators to test new technologies such as programmable distributed ledgers. Mills noted that this sandbox is instrumental in helping the UK’s financial markets explore the benefits of blockchain technologies and shared ledgers.
The DSS, Mills explained, allows financial firms to experiment with digital securities, potentially improving the efficiency of trading, reconciliation, and settlement processes. This initiative could also introduce new asset classes and enhance market liquidity by making securities trading more streamlined and cost-effective.
In addition to the DSS, Mills discussed the Bank’s ongoing efforts to enhance the Real-Time Gross Settlement (RTGS) system, which underpins the UK’s wholesale payments system. The BoE is working on ways to enable tokenized asset transactions to be settled using central bank money, reinforcing the reliability and security of these transactions.
Mills concluded by stressing the importance of continued collaboration with industry stakeholders to ensure that innovation in digital assets contributes to the UK’s monetary and financial stability objectives while managing the associated risks.