Key Takeaways:
Bank of England Deputy Governor Sarah Breeden told the Financial Times (FT) its stablecoin ownership limits may have been “overly conservative.”The BoE plans to lower its 40% central bank deposit requirement, which is stricter than U.S. rules, hurting UK stablecoin profitability.Breeden signaled the BoE sees no urgency to raise rates in June or July 2026, despite markets pricing in 2 to 3 hikes this year.The report notes that industry groups called those limits operationally “cumbersome.” Breeden acknowledged the criticism directly. “We are genuinely open to thinking whether there are other ways of achieving our objective,” she told the FT.
On separate monetary policy questions, Breeden pushed back against any expectation of near-term rate moves. Markets are currently pricing in two or three UK interest rate increases in 2026, with the first expected as early as summer. Breeden told the FT that timeline is not binding.
“We’ve got time to understand firstly the size of the shocks and secondly, how the economy is evolving,” she said. “You’re obviously correct that we can’t wait forever, but we don’t need to do it in June or July.”
The BoE has faced pressure over its ongoing balance sheet reduction, which involves unwinding a 525 billion pound bond portfolio. The FT report noted the central bank estimated last year that the process adds 0.15 to 0.25 percentage points to long-term interest rates, a figure Breeden described as “not enormous.”
