Bank of England’s Greene predicts tokenized deposits will replace stablecoins

On May 19, 2026, BoE Deputy Governor Sarah Breeden laid out the central bank’s roadmap for what it calls a “multi-money” retail payments system. The idea is that tokenized bank deposits, regulated stablecoins, and potentially a retail central bank digital currency could all coexist and interoperate alongside traditional bank deposits.

Draft rules for systemic stablecoins are expected to be published by June 2026, with final versions arriving by year-end. That timeline roughly mirrors what regulators in the US are working toward, suggesting a degree of transatlantic coordination on how to handle digital money.

UK banks are set to pilot tokenized customer deposits as early as 2026 or 2027, following the BoE’s prioritization of this innovation. The central bank has been actively encouraging banks to experiment with tokenization while operating within their existing prudential frameworks.

Previous proposals from the BoE suggested that systemic stablecoins should maintain at least 40% backing in unremunerated central bank deposits. Banks already hold reserves at the central bank. Stablecoin issuers would need to build that relationship from scratch, and on far less favorable terms.

BoE Governor Andrew Bailey has publicly flagged concerns that stablecoins could siphon deposits away from banks, weakening the lending capacity that the broader economy depends on. Bailey has been more supportive of tokenized deposits precisely because they keep this dynamic intact, with the liability staying on a bank’s balance sheet.

Notably, the BoE has avoided naming specific stablecoins like USDT or USDC in its public statements. The focus has been on building regulatory frameworks that address digital currency broadly, rather than singling out individual projects.

The 40% reserve requirement previously floated for systemic stablecoins is worth watching closely. If that number sticks in the final rules, it would significantly increase the cost of operating a large-scale stablecoin in the UK. Stablecoin issuers currently earn yield on the treasuries and other assets backing their tokens. Parking 40% of reserves in unremunerated central bank deposits would eat directly into that revenue model.

The BoE’s June 2026 draft rules will be the first concrete test of whether this vision translates into actionable policy. Regulatory frameworks that are too restrictive could push stablecoin innovation offshore. Frameworks that are too permissive could undermine the very banking stability the BoE is trying to protect.