The governor of the Bank of England has warned the world’s largest investment banks against issuing their own stablecoins, putting him on a collision course with the Trump administration’s backing of crypto assets.
In an interview with The Times, Andrew Bailey said moves by some of the world’s largest banks to launch their own stablecoins could threaten financial stability and the nature of money itself, as the digital assets did not offer users the same guarantees as traditional forms of bank money.
Bailey also hinted that he did not want the UK to adopt a central bank digital currency, known as the “digital pound” as the European Central Bank is likely to do before the end of the decade.
Christine Lagarde, the president of the European Central Bank, which is likely to adopt a central bank digital currency by the end of the decade.
HORACIO VILLALOBOS/CORBIS/GETTY IMAGES)
The comments suggest the governor will push for the tough policing of the stablecoin industry as the new chair of the Financial Stability Board (FSB), a role he took up this month. The FSB was set up in the aftermath of the 2008 financial crisis as a watchdog made up of the world’s largest economies, including the US, to monitor risks in financial markets.
A stablecoin is a type of cryptocurrency that is backed by a traditional asset such as the dollar or a commodity. The stablecoin market has ballooned to about $255 billion in the past two years, with most issuance dominated by dollar-backed digital currencies, according to the Bank of International Settlements (BIS).
