BoE Deputy Governor Reveals Bank Failure Strategy
Deputy Governor Dave Ramsden said the Bank’s resolution framework must remain flexible as new forms of finance, including digital money, develop.
The Bank of England is reviewing how it manages the failure of banks and other financial institutions as the financial system evolves, Deputy Governor Dave Ramsden said in a speech at King’s Business School.
He said the Bank’s ‘resolution framework’, which allows firms to fail in an orderly way while protecting depositors and financial stability, must remain flexible as new forms of finance and digital money develop.
In his speech at Bush House on 14 January 2026, Ramsden set out how the Bank of England’s approach to “resolution” has evolved in recent years, following the bank failures of 2023, and highlighted the measures the Bank and Prudential Regulation Authority announced last July responding to the lessons learned from those bank failures. Resolution refers to the framework used to manage the failure of a bank or other financial institution in an orderly way, ensuring essential services continue, protecting depositors and reducing reliance on public funds.
Resolution refers to the framework used to manage the failure of a bank or other financial institution in an orderly way, ensuring essential services continue, protecting depositors and reducing reliance on public funds.
He said the Bank’s ‘resolution framework’, must remain flexible as new forms of finance and digital money develop, and that the Bank’s approach to systemic stablecoins is designed to support innovation in payments while protecting financial stability:
“Trust in money is a critical part of the Bank’s mission. As innovation in money and payments accelerates, including through the potential growth of stablecoins, it is our job to ensure that the public can have the same trust in new forms of money as they do in existing ones.”
As part of that broader approach, Ramsden discussed the Bank’s thinking on how digital forms of money, including stablecoins, may need to be regulated in future.
Ramsden said the Bank launched a consultation in November on plans to regulate sterling-denominated systemic stablecoins, a form of digital money that is not currently protected by deposit guarantee schemes, as part of work to ensure the regime is in place if and when stablecoins become widely used.
He said under the proposals, systemic stablecoin issuers would be able to hold a portion of their backing assets in short-term UK government debt and, in certain circumstances, have access to liquidity from the central bank:
“Alongside granting such issuers access to a deposit account at the Bank, we are proposing that they can hold a portion of their backing assets in short-term UK government debt.”
Mr Ramsden also stressed the importance of planning for failure, arguing that public trust depends on clear arrangements for what happens if a stablecoin issuer collapses:
“To maintain trust in sterling stablecoins we are also considering what failure arrangements might need to be in place both now and in the future, as the UK systemic stablecoin sector develops.”
Ramsden also pointed to recent changes designed to protect depositors and maintain confidence in the financial system. From December 2025, the Prudential Regulation Authority increased the deposit protection limit from £85,000 to £120,000, meaning savers are protected up to that amount if their bank, building society or credit union fails.
You can watch Dave Ramsden’s full speech by visiting the King’s Business School YouTube channel.
https://www.kcl.ac.uk/news/bank-of-england-deputy-governor-outlines-approach-to-managing-bank-failures-as-financial-system-evolves