Nikolas Sargeant
Bank of England Governor Andrew Bailey has issued a stark warning to the world's largest banks, urging them to avoid issuing their own stablecoins amid growing concerns about financial stability. In a recent interview with The Times, Bailey denounced stablecoins as a fundamental threat to both monetary stability and the traditional banking system, marking a significant divergence from the crypto-friendly stance emerging in other major economies.
Bailey, who also serves as chair of the Financial Stability Board, argued that widespread stablecoin adoption could erode sovereign control over national currencies and create dangerous unregulated connections between cryptocurrency markets and traditional financial institutions. He specifically warned that if stablecoins draw money out of the banking system, banks would have reduced capacity to lend, potentially triggering disintermediation and liquidity challenges across the financial sector.
The Bank of England governor's position stands in sharp contrast to developments in the United States, where stablecoin adoption has become a cornerstone of President Trump's agenda to establish America as the global crypto capital. Bailey's warnings come as the stablecoin market has grown to exceed $100 billion in total value, with major financial institutions worldwide exploring their own digital currency offerings.
Instead of supporting private stablecoin issuance, Bailey has advocated for tokenized bank deposits as a safer alternative, arguing that this approach would maintain regulatory oversight while providing digital payment innovations. The Bank of England has been exploring its own digital currency initiatives, including launching a digital currency testing facility and developing plans for a potential "Britcoin" cryptocurrency. The governor also used the opportunity to warn investors against Bitcoin, characterizing it as a volatile and unbacked asset that poses risks to individual investors.
