Bank of England Remains Skeptical about Stablecoins as Form of Money

Tuesday, 23/11/2021 | 21:37 GMT by Felipe Erazo
  • BoE's Governor expressed doubts about stablecoins to guarantee financial stability in a digital era.
Bank of England Remains Skeptical about Stablecoins as Form of Money
Reuters

Andrew Bailey, Bank of England’s Governor, expressed his skepticism towards the security of stablecoins to become a regulated form of money, suggesting that central bank digital currencies (CBDC) meet that requirement.

According to Reuters, citing Bailey’s words before the House of Lords’ Economic Affairs Committee, stablecoins do not provide enough stability to the economy in the future of digital Payments . “Is it going to evolve to some world of (asset-) backed stablecoins which has money-like features which could be regulated? I must say I am skeptical about that. Or, is the better contribution, particularly to financial stability, to say the better alternative to that may be a central bank currency of digital form?” the BoE’s Governor commented.

Specifically, the concerns on how stablecoins can be considered a secure means of payment or money were sparked by announcements of tech giants like Facebook. In this case, lawmakers are concerned about privacy matters and the financial stability factors attached to the technology behind stablecoins. “We do not see this as the Bank of England moving into the retail bank account business through a central bank digital currency,” Bailey stated.

Global Regulators on Stablecoins

Regulators from other countries have recently issued statements on their views about stablecoins. For example, Tharman Shanmugaratnam, the Chairman of the Monetary Authority of Singapore (MAS), opened the doors in October for the cryptocurrency industry to develop in the country if it is regulated. He noted that digital assets like stablecoins could have a ‘useful’ role in future finance.

Furthermore, the US Treasury Department had reportedly instructed in a report to the US Securities and Exchange Commission (SEC) that it would have enough legal power over stablecoins like Tether (USDT). Therefore, the regulator could be greenlighted to establish a series of guidelines on how to police these tokens. This step taken by the US authorities could be part of the efforts to establish a clearer framework to regulate the cryptocurrency industry in the country.

Andrew Bailey, Bank of England’s Governor, expressed his skepticism towards the security of stablecoins to become a regulated form of money, suggesting that central bank digital currencies (CBDC) meet that requirement.

According to Reuters, citing Bailey’s words before the House of Lords’ Economic Affairs Committee, stablecoins do not provide enough stability to the economy in the future of digital Payments . “Is it going to evolve to some world of (asset-) backed stablecoins which has money-like features which could be regulated? I must say I am skeptical about that. Or, is the better contribution, particularly to financial stability, to say the better alternative to that may be a central bank currency of digital form?” the BoE’s Governor commented.

Specifically, the concerns on how stablecoins can be considered a secure means of payment or money were sparked by announcements of tech giants like Facebook. In this case, lawmakers are concerned about privacy matters and the financial stability factors attached to the technology behind stablecoins. “We do not see this as the Bank of England moving into the retail bank account business through a central bank digital currency,” Bailey stated.

Global Regulators on Stablecoins

Regulators from other countries have recently issued statements on their views about stablecoins. For example, Tharman Shanmugaratnam, the Chairman of the Monetary Authority of Singapore (MAS), opened the doors in October for the cryptocurrency industry to develop in the country if it is regulated. He noted that digital assets like stablecoins could have a ‘useful’ role in future finance.

Furthermore, the US Treasury Department had reportedly instructed in a report to the US Securities and Exchange Commission (SEC) that it would have enough legal power over stablecoins like Tether (USDT). Therefore, the regulator could be greenlighted to establish a series of guidelines on how to police these tokens. This step taken by the US authorities could be part of the efforts to establish a clearer framework to regulate the cryptocurrency industry in the country.

About the Author: Felipe Erazo
Felipe Erazo
  • 1036 Articles
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About the Author: Felipe Erazo
Felipe earned a degree in journalism at the University of Chile with the highest honour in the overall ranking, and he also holds a Bachelor of Arts in Social Communication. In addition, he has been working as a freelance writer and Forex/crypto analyst, with experience gained from several forex broker firms and crypto-related media outlets around the world. He has been involved in the world of online forex trading since 2010 and in the crypto sphere since 2015.
  • 1036 Articles
  • 42 Followers

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