UK financial markets digitisation plan could lift economy by £33bn

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UK markets digitisation plan

Highlights

Chris Woolard's report estimates that accelerating the digitisation of UK financial markets could boost economic output by £33bn and generate £14bn in extra tax revenue over the next decade.
The task force’s 12-month plan, backed by 54 financial institutions including BlackRock and JPMorgan Chase, includes issuing a sovereign bond on blockchain and using tokenised assets as collateral in repo markets.
The global tokenised real-world asset market could reach $88tn by 2035, and the report warns that UK progress is crucial amid competition from the U.S., UAE, Singapore, Hong Kong, Switzerland and the EU.

Task force sets out tokenisation roadmap

As reported by the Financial Times, Chris Woolard, the Treasury-appointed wholesale digital markets champion, says the UK stands to gain a £33bn economic boost if it moves faster to digitise financial markets. He tells the newspaper that issuing a sovereign bond on blockchain and confirming its use as collateral are among the steps needed to secure the UK’s place in the next generation of financial markets.

Woolard’s report, due for publication on Monday, lays out a 12-month plan covering nine priority areas and is backed by a task force of 54 financial institutions. The group includes BlackRock, JPMorgan Chase, Morgan Stanley, UBS, Barclays, Coinbase and Circle.

The initiative aims to use distributed ledger technology, the system behind cryptocurrencies such as bitcoin, to improve how financial assets are traded, settled and cleared. The report says tokenised markets offer the UK a significant opportunity to improve efficiency, support innovation and defend its global role in established financial markets.

A central goal is to show by next year that tokenised assets can be used as collateral in repo markets to raise cash. The report says the work begins with an end-to-end repo transaction and adds that, if implemented at scale, tokenisation could free up capital for growth investment and create new revenue sources.

Competitive pressure and regulatory momentum

The report estimates the global market for tokenised real-world assets such as shares, bonds and property could reach $88tn by 2035. Based on estimates by Barclays and PwC, tokenisation could add as much as £33bn to UK economic output and generate an extra £14bn in tax revenue over the next decade if the market develops as expected and the UK becomes a leading hub.

The push comes amid criticism of the UK’s digital asset regime, particularly over additional restrictions the Bank of England has proposed for systemic stablecoins. But the central bank has recently eased some restrictions in its final stablecoin rules, while the Financial Conduct Authority last month softened some requirements for non-systemic stablecoins in its final cryptoasset regulations.

Woolard says other jurisdictions have marketed themselves effectively, particularly the U.S., but argues the UK is taking practical steps. He calls on the government to launch the long-delayed sale of a digital gilt by the first quarter of next year and says the Bank of England should soon confirm it will accept digital gilts as collateral.

His report warns that the UK faces strong competition from the U.S., the United Arab Emirates, Singapore, Hong Kong, Switzerland and the EU. It adds that any slowdown in progress risks undermining the UK’s standing as a leading global financial services hub.

In our earlier article on Treasury officials weighing a combined autumn Budget and spending review, we explained how the new leadership was considering a single fiscal event to set out tax and departmental funding plans ahead of the next election cycle. We also highlighted the pressure from higher defence commitments and the risk of real-terms cuts for unprotected departments flagged by the OBR, underscoring how tight public finances could shape policy choices.

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