The governor of the Bank of England, Andrew Bailey, underlines that the stablecoins could play a key role in the transformation of the British monetary system. By affirming that they can reduce the country's dependence to commercial banks, Bailey opens the way to a deep reflection on the future of money and credit in the United Kingdom.
In short
- Andrew Bailey claims that stablecoins could dissociate credit currency and lighten the role of commercial banks.
- The Bank of England is preparing a regulatory regime to integrate stablecoins into payments and regulations.
- The potential access of stablecoins to the central bank accounts would strengthen their monetary status in the United Kingdom.
Stablecoins and independence from banks
In his analysis published by the Financial Times, Bailey recalls that the current system is based on a well -known model. Indeed, banks create money via credit thanks to their customers' deposits. However, this architecture, from the system with fractional reserves, exposes savers at a certain risk, because the currency depends directly on the solidity of bank loans.
Stablecoins, on the other hand, could break this direct link between monetary creation and bank credit. By dissociating these two mechanisms, the United Kingdom could strengthen its resilience in the face of liquidity crises. Concretely, this would mean that stable digital currency would circulate traditional deposits in parallel. It would thus offer individuals and businesses a more secure alternative for their payments.
However, Bailey remains cautious. It is true that he admits that the stablecoins offer fertile land for monetary innovation. However, he underlines that the transition must be carefully planned to avoid the collateral effects on financial stability.
The debate around ceilings and uses
The governor's words come in a tense context. Indeed, the Bank of England recently considered imposing limits on stablecoins assets. It is a measure deemed restrictive and costly by actors in the crypto industry. The latter feared that the United Kingdom would be late in the face of other more flexible jurisdictions, such as the European Union or the United States.
For Tom Duff Gordon, vice-president of international policy at Coinbase, these ceilings constitute an anomaly. According to him, no other large market deemed necessary to limit the use of stablecoins. If this constraint persisted, London would risk losing its attractiveness in an expanding sector.
However, Bailey's recent statements could mark a turning point. Its opening towards a broad adoption of stablecoins for payments and regulations suggests a revision of initial projects. Its objective is to lastingly register stablecoins in the real economy.
The strongest signal sent by the Bank of England concerns the possibility for British stablecoins to directly access accounts with the Central Bank.
Bailey nevertheless insists on the necessary safeguards. Reserve assets must be without risk, insurance mechanisms will have to protect users against technological faults, and interoperability standards must be implemented. In other words, stablecoins will have to evolve to deserve their place alongside the pound sterling.
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