The Bailey Mansion House speech: growth, regulation and the future of money
In short: the Bailey Mansion House speech of 14 July 2026 links growth to regulatory design. Andrew Bailey applies that test to bank capital, tokenised money and AI. The Bank’s test for new forms of sterling is whether they preserve nominal value and settlement finality. Two deadlines are now close: the Retail Payments Infrastructure Board consultation closes on 11 September 2026, roughly two weeks away, and responses on the stablecoin Code are due by 22 September 2026, under four weeks away.
New forms of money will work only if a pound keeps the same value and a completed payment stays complete. That principle links the Bank of England’s work on tokenised deposits, systemic stablecoins, retail infrastructure and the Digital Securities Sandbox. Andrew Bailey also asked who carries responsibility when an AI system initiates a payment.
Bailey used his Mansion House speech on 14 July 2026 to argue that regulation should be judged by its purpose and results, not its volume. Payments provides the clearest example: technology may change money’s form, but it cannot weaken confidence in value or settlement finality.
Key points
- Bailey treats financial stability as a condition of growth and supports changes to rules where they improve their calibration without weakening resilience. Source: Bailey speech.
- The Bank is designing tokenised deposits with banks and is connecting renewed RTGS infrastructure to external ledgers through its Synchronisation work. Source: Bailey speech.
- The Bank proposes a temporary £40 billion issuance guardrail for each systemic stablecoin product, replacing the earlier proposal for individual and business holding limits. Source: Bank of England policy statement.
- The Retail Payments Infrastructure Board consultation closes on 11 September 2026. Responses on the draft systemic stablecoin Code of Practice are due by 22 September 2026. Sources: RPIB consultation and stablecoin consultation.
- Bailey leaves the liability position for AI payment agents open. Regulation 67 of the Payment Services Regulations 2017 requires payer consent, which may cover a transaction or a series of transactions. Sources: Bailey speech and regulation 67.
| Workstream | Current position | Next step |
|---|---|---|
| Tokenised money | The Bank is designing tokenised deposits with banks. The first Digital Securities Sandbox participant was approved for live activity on 13 July 2026, according to the speech. | DIGIT issuance and work with HM Treasury on its eligibility as collateral in Bank market operations. |
| Systemic stablecoins | The Bank published its policy statement and draft Code of Practice on 22 June 2026. | Responses by 22 September 2026; the Bank intends to finalise the Code by the end of 2026. |
| Retail infrastructure | The RPIB opened its consultation on 25 June 2026. | Responses by 11 September 2026, followed by a Blueprint and Requirements for an industry-owned Delivery Company. |
Growth depends on regulatory purpose
UK potential supply growth averaged around 2.8% a year in the fifteen years before the financial crisis and 1.3% a year in the period since. Bailey’s response is to define the objective of each rule and minimise undesirable side effects. Bank capital illustrates the method: the Financial Policy Committee and the Prudential Regulation Authority announced proposed changes on 7 July 2026 to improve buffer usability and address unintended effects in the leverage ratio while maintaining resilience.
Payments: the same money on new infrastructure
The Bank anchors payments regulation to the singleness of money and settlement finality. Singleness means that a pound retains the same nominal value in each form. Finality means that a completed payment can be relied upon, both operationally and legally. Those outcomes allow the Bank to support new technology without treating innovation as an end in itself.
The Bank renewed the RTGS settlement system in 2025 and is developing its Synchronisation lab to connect central bank money to external ledgers. The Digital Securities Sandbox, run jointly with the Financial Conduct Authority (FCA), supports tokenised issuance. Bailey said its first participant received approval for live activity on 13 July 2026. The work also supports DIGIT, the planned UK digital gilt, which the Bank and HM Treasury intend to make eligible as collateral in the Bank’s market operations.
Tokenised deposits would keep deposit money within the regulated banking system while allowing it to move on digital ledgers. Programmability could make payment conditional on delivery of goods or proof of identity, moving part of the audit from after payment to before it. The legal and operational safeguards still need to preserve the value of the deposit and the finality of the resulting payment.
The Bank applies the same principles to systemic stablecoins in its policy statement and draft Code of Practice. It proposes a temporary issuance guardrail of £40 billion for each systemic stablecoin product, rather than a cap for each issuer. The guardrail replaces the earlier proposal for holding limits applying to individuals and businesses. Responses are due by 22 September 2026, now under four weeks away, and the Bank intends to finalise the Code by the end of the year. The UK stablecoin framework divides responsibility between the Bank for systemic arrangements and the FCA’s wider role.
The Retail Payments Infrastructure Board opened its consultation on future retail payments infrastructure on 25 June 2026. The consultation closes on 11 September 2026, now roughly two weeks away, and will inform a Blueprint and Requirements for an industry-owned Delivery Company. The next-generation infrastructure design will determine the account-to-account layer, while product-level arrangements will determine how firms compete above it. Safeguarding and scheme-governance duties will depend on each firm’s role, service and funds flow.
AI payment agents: authority and consent
Bailey did not give a settled answer on liability for an AI system that buys or trades on a user’s behalf. He asked whether software without separate legal personality should be treated as a tool of the principal, leaving the principal responsible for its acts, and how governance should work once an AI system can spend real money. The speech identifies the issue; it does not resolve the law of authority or liability.
Regulation 67 of the Payment Services Regulations 2017 governs payment authorisation, not agency or liability. A transaction is authorised only if the payer has consented to it or to a series of which it forms part. Consent must follow the form and procedure agreed with the payment service provider. It may be given before execution or, if the payer and provider agree, afterwards. A payment service provider designing such a product should define the transactions covered, the consent procedure and withdrawal, and the treatment of automated instructions outside those limits.
HM Treasury’s Modernising Payment Services Regulation consultation, published on 14 July 2026, bears directly on this point: it asks whether the consent, authentication and unauthorised-transaction liability provisions of the PSRs 2017 need updating for agentic payments, with responses due by 6 October 2026. The consultation and the accompanying Financial Services AI Adoption Plan are covered in agentic payments: what HM Treasury is consulting on.
The authors of the FCA-hosted Mills Review concluded that firms remain responsible for the services they provide as AI systems take on more work. That is a review finding, not a new FCA rule. The accountability questions raised by the review concern governance, outcome testing and the evidence needed to show where human authority ends and automated action begins.
Viewpoint
I read Bailey’s payments analysis as a clear condition for innovation: money may change form, but its nominal value and the finality of payment must survive the change. Tokenised deposits, systemic stablecoins and new retail infrastructure are different implementations of that condition.
The unresolved issue is who bears the loss when an AI system’s payment instruction exceeds its authority. Regulation 67 can accommodate consent to a series of transactions; it does not remove the need to define that series, record the payer’s consent and deal with an instruction outside the agreed limits. The allocation of responsibility will depend on product terms, scheme rules, agency and contract law, and applicable regulatory duties.
Frequently asked questions
What did the Bailey Mansion House speech say about payments?
Bailey said payments regulation should preserve the singleness of money and settlement finality while supporting innovation. He linked those objectives to tokenised deposits, the Digital Securities Sandbox, systemic stablecoins and the Retail Payments Infrastructure Board’s work on next-generation infrastructure.
What is the Bank’s £40 billion stablecoin limit?
The Bank proposes a temporary £40 billion issuance guardrail for each systemic stablecoin product. It is not a per-issuer cap or a limit on each user’s holdings. The Bank replaced its earlier proposal for individual and business holding limits after consultation feedback identified substantial implementation problems.
Can a payer authorise a series of AI-initiated payments under the PSRs 2017?
Yes. Regulation 67 permits the payer’s consent to cover one transaction or a series, provided consent follows the form and procedure agreed with the payment service provider. It does not decide who bears responsibility if the AI system acts outside that scope.
When do the Bank’s payments consultations close?
The RPIB consultation on future retail payments infrastructure closes on 11 September 2026. Responses to the Bank’s draft Code of Practice for sterling-denominated systemic stablecoin issuers are due by 22 September 2026. The Bank intends to finalise the stablecoin Code by the end of 2026.
For advice on how tokenised deposits, systemic stablecoins or AI-initiated payments affect authorisation, safeguarding or scheme arrangements, contact Rob Bratby at Bratby Law.
