UK can ‘reap the benefits’ of stablecoins in finance, says Bank governor

The governor of the Bank of England has said the UK should “reap the benefits” of stablecoins as part of the country’s financial system.

Andrew Bailey said it would be “wrong to be against stablecoins as a matter of principle” amid broad debate over the future of money.

However, in an article for the Financial Times, he stressed that widely used stablecoins should be regulated in a similar way to traditional money.

Stablecoins are a form of cryptocurrency which are pegged to official currency.

These differ from other cryptocurrencies, such as Bitcoin, which have no innate monetary value, and are therefore volatile.

Mr Bailey said that physical money assets and digital assets can co-exist in a changed financial system to how it currently operates.

“The system does not have to be organised like this,” he said.

“It is possible, at least partially, to separate money from credit provision, with banks and stablecoins co-existing and non-banks carrying out more of the credit provision role.

“But it is important to consider the implications of such a change thoroughly before going ahead.”

In July, the governor said in his Mansion House speech that stablecoins will not replace traditional bank money.

On Wednesday, he added that the central bank will publish a consultation on stablecoins in the UK in the “coming months”, which look at how they can be regulated.

Mr Bailey said: “We will set out that widely used UK stablecoins should have access to accounts at the BoE in order to reinforce their status as money.

“This will be a critical part of creating an advanced regime for stablecoins, one that ensures the UK can reap the benefits while maintaining a stable financial system.”