based on materials from the site - By Coindoo.com
Instead, Bailey advocates for tokenized deposits from commercial banks as a safer path towards integrating digital finance.
In a recent interview with The Times, Bailey highlighted potential threats to financial stability in the event of widespread adoption of stablecoins. He warned that allowing banks to issue private tokens could weaken their lending capacity and create systemic vulnerabilities, especially during periods of market instability. 'If money leaves the banking system, banks will have fewer opportunities to lend,' he said, emphasizing his concerns about disintermediation.
Bailey's comments reflect a growing divergence in policy between the UK and the US regarding digital assets. While the US — under President Trump — supported innovations in stablecoins, including the issuance of the USD1 token with a market capitalization of $2.2 billion, the UK has adopted a more cautious approach.
As Chairman of the Financial Stability Board, Bailey also identified stablecoins as potential channels for money laundering, pointing to the risks associated with unregulated digital payment systems. This sharply contrasts with the pro-stablecoin sentiments underlying the GENIUS Act in the US, which paves the way for broader adoption of stablecoins under federal oversight.
European regulators share Bailey's concerns. EU officials warn that dollar stablecoins could threaten the sovereignty of the euro, leading to stricter MiCA regulations and renewed interest in a digital euro.
Bailey is also skeptical about the need to create a digital currency for the central bank of the UK. Instead of striving for a digital pound, he suggested that digitizing commercial deposits would be a more 'sensible' approach that preserves the core functions of the banking system.
The Bank of England's position reflects a growing divide in global policy regarding digital currencies — between jurisdictions eager to accelerate innovation and others prioritizing systemic safeguards and regulatory oversight.
The publication 'No to Stablecoins': The Bank of England opposes private tokens first appeared on Coindoo.
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