Bank of England Chief Says Private Stablecoins Issuing Could be Risky

Bank of England Chief Andrew Bailey warns that private banks issuing stablecoins could seriously threaten the financial system.

Bank of England Warns Banks Against Issuing Stablecoins

The Bank of England Chief has warned that private companies issuing stablecoins could pose financial risks, stressing the need for strong regulation.

In a recent interview with The Sunday Times, Bailey stressed that stablecoins could undermine monetary stability and weaken government control over national currencies. Instead of pursuing stablecoins, he suggested that the BOE focus on tokenizing bank deposits as a safer alternative. 

Bailey also raised concerns about introducing a central bank digital currency (CBDC), saying the UK’s central bank should not aim to launch a centrally controlled digital currency.

As the newly appointed chairman of the Financial Stability Board (FSB), Bailey is expected to take a firm stance on overseeing the growth of stablecoins worldwide. Despite their growing role in crypto and cross-border payments, Bailey remains concerned about their broader impact on currency control and economic stability.

US Backs Stablecoins Despite EU Concerns

The Trump administration has clarified that creating strong stablecoin regulations is a top priority for the United States.

At the White House Digital Asset Summit in March, Treasury Secretary Scott Bessent said stablecoins could help keep the US dollar strong globally. He explained that stablecoins backed by cash or short-term U.S. Treasury bills are very liquid and trustworthy.

By letting private companies tokenize US debt, the administration believes it can ease inflation pressure while increasing global demand for  US financial assets by making them accessible to anyone with a smartphone and a crypto wallet.

Federal Reserve Chair Jerome Powell has also shown support for stablecoins, calling for consistent and clear policies to govern their use.

Meanwhile, European officials have raised strong concerns, warning that the growth of dollar-backed stablecoins could disrupt the EU’s financial system and weaken the euro’s role in global markets.