Bank of England Governor Andrew Bailey expresses growing concern about the development of Stablecoin in Europe.

Mr. Andrew Bailey has joined a group of European officials warning about the potential risks and management challenges from the expansion of Stablecoin in the financial system.

MAIN CONTENT

  • The Governor of the Bank of England emphasizes concerns over the rise of Stablecoin.

  • European officials call for tighter oversight of new financial technologies.

What has Bank of England Governor Andrew Bailey warned about Stablecoin?

Andrew Bailey, the Governor of the Bank of England, asserts that the rapid growth of Stablecoin is creating hidden risks for the traditional financial system. He noted that a lack of adequate regulation could threaten the stability and efficiency of global payments.

According to Mr. Bailey, Stablecoin is designed to maintain a stable price but still poses significant instability risks due to a lack of strict oversight, threatening user liquidity and trust.

"Without strict control, Stablecoin can pose serious risks to both the financial market and consumers."
Andrew Bailey, Governor of the Bank of England, 2024

Why are European officials concerned about the development of Stablecoin?

European financial experts view Stablecoin as potentially disrupting the traditional payment system due to its ability to replace national currency for faster and more convenient transactions. However, legal and financial safety issues have yet to be fully addressed.

The EU Commissioner for Internal Market previously emphasized that the financial system needs to be regulated to align with new technologies in order to mitigate potential risks to users and the global economy.

How are Stablecoin management solutions being proposed?

To address the risks from Stablecoin, many European countries have proposed stricter laws requiring transparency in reserve assets, closely monitoring issuance activities, and holding issuers to higher legal accountability.

At the same time, they recommend developing national payment infrastructure to counter Stablecoin, ensuring financial stability and minimizing systemic risk.

"Establishing a clear legal framework for Stablecoin will facilitate sustainable development and prevent systemic risks."
EU Financial Expert, 2024

How does Stablecoin affect the traditional financial system?

Stablecoin provides fast, low-cost payment methods but can also diminish the role of central banks in conducting monetary policy. Additionally, Stablecoin poses a risk of liquidity crises when users withdraw funds en masse.

For example, the latest report from the Financial Stability Board (FSB) shows that the rapid growth of Stablecoin could lead to hidden financial leverage, increasing systemic risk throughout the financial system.

Frequently Asked Questions

What is Stablecoin? Stablecoin is a type of cryptocurrency that maintains a stable value pegged to assets such as fiat currency or gold, aimed at reducing price volatility. Why is Stablecoin a concern for central banks? Stablecoin can affect monetary policy and undermine the traditional role of central banks in controlling liquidity. How are Stablecoin management measures being applied? Many countries require strict controls over collateral assets, transparency, and legal accountability from Stablecoin issuers. How does Stablecoin affect users? Stablecoin facilitates fast and convenient payments but also poses risks of depreciation due to a lack of adequate regulation and oversight. Who is a pioneer in warning about Stablecoin risks in Europe? Andrew Bailey, the Governor of the Bank of England, is one of the first to speak out about the dangers of Stablecoin in Europe.

Source: https://tintucbitcoin.com/ngan-hang-anh-canh-bao-rui-ro-stablecoin/

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