The Bank of England has expressed concerns about the potential risks associated with stablecoins during a lecture by Governor Andrew Bailey.
What Are Stablecoins
Stablecoins are digital currencies tied to real-world money, such as the US dollar, to maintain their value. Their intended purpose is to ensure stability when used as a medium of exchange.
Governor's Concerns
During a lecture at the Andrew Crockett Memorial, Governor Bailey emphasized that central banks need to 'watch carefully' how payment systems are changing. He noted that widespread use of stablecoins could undermine trust in traditional currencies. Bailey also expressed concern about how new forms of money could affect the stability of the financial system.
US Legislation and Its Impact on Stablecoins
Meanwhile, U.S. lawmakers are pushing forward the GENIUS Act, aimed at regulating the stablecoin industry. Supporters of the legislation believe it could strengthen the dollar globally, but some experts warn of potential reliance on the U.S. in countries utilizing digital dollars.
The Bank of England continues to warn about new risks associated with the adoption of stablecoins, emphasizing the need for central banks to closely monitor changes in payment systems.
