Stablecoins threaten financial stability, says Bank of England governor Andrew Bailey

The governor of the Bank of England and skeptical of cryptocurrencies Andrew Bailey advised the banks to avoid emitting stablecoins.

According to Bailey, stablecoins have systemic risks to financial stability and threaten the very nature of money if they are not properly regulated.

He warned that stablecoins do not have the protections and guarantees offered by traditional bank deposits and could withdraw money from the regulated banking system, undergoing credit creation and monetary control.

The plans of some of the largest investment banks in the world to issue their own stablecoins have raised a particular concern for Bailey, because it common During an interview with the Sunday Times.

“The stablecoins are offered to have the characteristics of money. This money is a means of exchange. Therefore, they must really have the characteristics of money, and they must maintain their nominal value. We will have to look at it very closely through this objective. It is both a problem of financial stability and a money problem in this direction,” he was quoted.

Bailey, who is also serving as chairman of the board of directors of financial stabilitywarned that stablecoins could erode sovereign control over national currencies and introduce unregulated links between cryptographic markets and the traditional financial system.

Instead of supporting the Stablecoins, Bailey, who also has Talked against the delivery of a CBDC BOEsaid he “prefer a lot”, the banks continue token deposits, which are digital versions of traditional money issued by regulated institutions.

This approach, he added, would help preserve the integrity of the banking system while offering the advantages of digital payments, making it a more “reasonable” path.

Worldwide, the Stablescoin market has cultivated About $ 255 billion, according to the international regulations bank.

Banks like JpmorganCiti and Bank of America are exploration Stablecoin’s emission, while US officials argue that the stable -coated dollars could help extend the world’s domination of the US dollar.

The stablecoins supported by a dollar dominating the sector, regulators around the world began to introduce new policies and proposals Manage their growth and respond to potential risks.

As such, stablecoins have become a key policy objective in several jurisdictions. In the United States, legislators are should approve the law of engineeringThis would allow commercial banks to issue stablecoins in an official regulatory framework. At the same time, countries like China,, Singaporeand the United Arab Emirates have advanced regulations in response to the growing influence of sustained stables of a dollar.