Andrew Bailey sharply criticizes bank tablecoins and contradicts Trump's pro-cryptocurrency wave: The Times
The governor of the Bank of England, Andrew Bailey, warned global investment banks against developing his own stable coins and emphasized possible threats to financial stability.
Spoken in an interview With The Times, Bailey took an attitude, which in a strong contrast to support the crypto-initiatives by the US government under President Donald Trump, who fueled expectations of a friendlier regulatory climate in the country.
Bailey expressed skepticism about stablecoins that Digital tokens that are bound to traditional assets Like the dollar. He argued that stable coins did not have the same collateral as conventional bank deposits and could deduct money from the banking system, which would potentially weaken lending and control of monetary policy.
“Stable coins should have the properties of money,” said Bailey. “This money is a medium of exchange. Therefore, you actually have to own the properties of money and maintain your nominal value. We will have to look at this very precisely from this point of view. It is both a question of financial stability and a monetary question in the truest sense of the word.”
Instead, he encouraged the banks to explore tokenized interludes, digitize existing forms of money and at the same time keep them firmly under regulatory supervision. Bailey indicated that Great Britain may have been better to expand its digital banking infrastructure instead of one Digital central bank currency (Central digital currency, CBDC)as the European Central Bank plans to do in the coming years.
His warnings come exactly at the time when the US Congress Genius Acta proposal to enable commercial banks to issue stable coins. Institutions such as JPMorgan and Citi are reportedly preparing for such steps and expect an increase in digital financial activities under more loose regulations. Cryptocurrencies such as Bitcoin have gained great value in the course of speculation about a looser policy in the world's largest economy.
