Andrew Bailey, governor of the Bank of England (BOE), has issued a warning against stablecoin issuance by banks, arguing that the central bank should instead prioritize tokenizing deposits.
According to the BOE official who spoke with The Sunday Times, stablecoins pose grave threats to banking institutions and the overall stability of the financial system. This, in turn, might lead sovereign governments to relinquish control of their currencies.
Additionally, he said that the Bank of England should neither create a digital fiat token that is controlled by the central bank or implement a central bank digital currency (CBDC). It is believed that Bailey would restrict the spread of stablecoins. While serving as head of the Financial Stability Board (FSB), an international financial regulator.
Trump Administration Backing Stablecoins
One of the most prominent sectors of cryptocurrency, stablecoins have the potential to make fiat currencies more widely usable. By bringing payment rails on-chain and doing away with the requirement for a strong banking infrastructure to transfer funds internationally. This would make major currencies like the US dollar, euro, and yen more accessible to a wider audience. Moreover, a major goal of the Trump administration has been the establishment of thorough rules for stablecoins in the US.
Scott Bessent, US Treasury Secretary, said at the March White House Digital Asset Summit that stablecoins would prolong the dollar’s supremacy. And guarantee that the dollar continues to be the world’s reserve currency. Issuers of overcollateralized stablecoins use the liquid assets of banks or short-term US Treasury bills. In order to guarantee the value of their digital fiat tokens.
Tokenizing US debt instruments by private enterprises may help the government reduce dollar inflation by making them more accessible to anybody with a smartphone and a cryptocurrency wallet.
Highlighted Crypto News Today:
Bitcoin Hits New ATH, While Ethereum Crosses $3K Ahead of Crypto Week
