according to material from the site - By 36crypto
Andrew Bailey, the head of the Bank of England and chair of the Financial Stability Board, issued a stern warning to commercial banks regarding the issuance of stablecoins. He stated that allowing banks to issue their own digital tokens could jeopardize financial stability and weaken government control over national currencies.
In a recent interview, Bailey emphasized that the introduction of private stablecoins carries significant risks, including illegal use and the potential for financial fragmentation.
He noted that these types of assets would allow avoiding centralized monetary systems that create issues of control and regulation.
Bailey suggested that banks consider the possibility of tokenizing existing deposits instead of creating stablecoins or central bank digital currencies. This approach will allow for the implementation of digitization without disrupting the banking system and without creating uncontrolled alternatives.
He clarified that the UK does not intend to issue a digital pound. Bailey believes that tokenized bank deposits will be a safer method, as they represent a controlled way of digitizing money, especially payments.
The position of the Bank of England differs from the policies of other major economies. Bailey noted that the United States apparently supports stablecoins, and the European Central Bank is making progress on the digital euro.
In contrast, the UK is determined to support the development of core banking networks through digital innovations without a central bank digital currency.
Bailey acknowledges the risks and calls for global caution.
Bailey also touched on a broader global approach to digital assets. He urged central banks around the world to exercise caution and prioritize financial stability when developing any digital currency systems.
In response to recent events in the US, he expressed disagreement with President Donald Trump's explicit support for the expanded use of stablecoins. According to Bailey, neither the US central bank nor the European Central Bank is moving towards the tokenization of deposits, which he believes would promote greater stability and align with the nature of modern finance.
Moreover, Bailey reminded the public that cryptocurrencies should not be considered real money. He warned against using digital assets for purposes where money is genuinely needed, and that their use may entail unjustified risks for investors.
The position of the Bank of England confirms the UK's cautious approach to digital currency. By warning banks against issuing stablecoins, Bailey demonstrates a preference for digital evolution within a safe and regulated financial system.
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