Andrew Bailey, the Governor of the Bank of England, has expressed concerns regarding the increasing prevalence of stablecoins, aligning himself with a growing cohort of European officials who share similar apprehensions.
Andrew Bailey, the Governor of the Bank of England (BOE), has recently expressed concerns regarding the issuance of stablecoins by banking institutions. He advocates for the BOE to prioritize the tokenization of deposits instead. In an interview with The Sunday Times, Bailey articulated that stablecoins pose systemic risks to banking entities, which could potentially destabilize the broader financial system and undermine the ability of sovereign governments to maintain control over their currencies.
He further stated that the central bank of the United Kingdom should refrain from implementing a Central Bank Digital Currency (CBDC) or attempting to introduce a centrally-controlled digital fiat token.
Bailey has been appointed as the new chairman of the Financial Stability Board (FSB), an international financial regulatory body, indicating that he plans to take action against the growth of stablecoins during his leadership.
Stablecoins represent a significant segment of the cryptocurrency market and have the potential to enhance the global usability of fiat currencies by integrating payment systems on blockchain technology. This reduces the reliance on strong banking systems for cross-border transactions, thus making major currencies like the US dollar, euro, and Japanese yen more accessible to a wider audience.
