Bank of England Governor Andrew Bailey warned global investment banks not to develop their own stablecoins, highlighting the possible threat to financial stability.
Speak in the interview With the Times, Bailey took a stance, in stark contrast to the support of the cryptocurrency initiative by U.S. President Donald Trump, which intensified expectations for the country’s friendly regulatory climate.
Bailey expressed doubts about the stablecoin. Digital tokens related to traditional assets Like US dollars. He argued that the safeguards for stablecoins do not have the same safeguards as conventional bank deposits and could steal funds from the banking system, potentially undermining credit creation and monetary policy controls.
“People who propose stability have the characteristics of money,” Bailey said. “This money is a medium of communication. So they do have to have the characteristics of money and they have to maintain their nominal value. We will have to study it very carefully through this lens. In this sense, it is both a financial stability issue and a money issue.”
Instead, he encouraged banks to explore deposits of tokens that digitize existing forms of currency while firmly under regulatory oversight. Bailey Central Bank Digital Currency (CBDC)as the European Central Bank plans to do in the next few years.
When the U.S. Congress believes Genius Lawa suggestion to stabilize the issuance of commercial banks. It is reported that agencies such as JPMorgan Chase and Citi are preparing for the move, with digital financing expected to surge under loose rules. Cryptocurrencies like Bitcoin have soared in speculation about larger policies in the largest economies of the term.
