Bank of England Governor Andrew Bailey has expressed concerns regarding stablecoins, urging banks to focus on tokenized deposits.
Warning on Stablecoins
In a recent interview, Bailey stated that he would prefer to see the banking sector focus on tokenized deposits rather than stablecoins. He indicated that stablecoins could siphon funds from the traditional banking system, potentially disrupting lending and weakening financial stability.
Comparison with US Policy
Bailey's remarks come at a time when Washington is moving in the opposite direction. Under President Donald Trump, the US is close to passing legislation that supports commercial banks in issuing stablecoins, providing a regulatory framework for dollar-pegged digital assets.
Tokenized Deposits Over CBDC
Bailey also showed a cooling-off toward launching a central bank digital currency (CBDC). He suggested that the UK might achieve similar outcomes by encouraging commercial banks to digitize deposits, emphasizing that the Bank of England is not in a hurry to issue a CBDC.
Andrew Bailey's stance highlights the UK's cautious approach to stablecoins and a focus on tokenizing deposits, contrasting with the US's liberal measures.
