{"id":510793,"date":"2025-07-14T22:30:38","date_gmt":"2025-07-14T17:00:38","guid":{"rendered":"https:\/\/ambcrypto.com\/?p=510793"},"modified":"2025-07-14T17:16:03","modified_gmt":"2025-07-14T11:46:03","slug":"if-stablecoins-take-money-does-boe-governors-prediction-hold-weight","status":"publish","type":"post","link":"https:\/\/ambcrypto.com\/if-stablecoins-take-money-does-boe-governors-prediction-hold-weight\/","title":{"rendered":"‘If stablecoins take money…’ Does BoE Governor’s prediction hold weight?"},"content":{"rendered":"

Key Takeaways<\/strong><\/h2>\n

The Bank of England favors tokenized deposits over stablecoins to preserve lending and reduce risk. Bailey warns of crime, instability, and questions the need for a digital pound in today\u2019s system.<\/em><\/p>\n

\n

Big banks eyeing their own stablecoins<\/a> are facing fresh pushback from the Bank of England.<\/a><\/p>\n

BoE Governor Andrew Bailey has warned<\/a> that letting lenders issue private digital currencies could undermine financial stability.<\/p>\n

He added that the UK is leaning toward more secure alternatives like tokenized bank deposits.<\/p>\n

Tokenized deposits vs. stablecoins<\/strong><\/h2>\n

Bailey made clear that the Bank of England\u2019s preference lies with tokenized bank deposits \u2014 digital representations of money already held in accounts \u2014 rather than privately issued stablecoins.<\/p>\n

This approach, he said, helps maintain monetary control and credit creation while reducing systemic risks.<\/p>\n

Bailey warned in a recent interview,<\/p>\n

\n

\u201cIf stablecoins take money out of the banking system, banks have less capacity to lend.”<\/p>\n<\/blockquote>\n

Unlike stablecoins, which operate outside traditional banking channels, tokenized deposits function within the regulated system, making them more compatible with the BoE\u2019s financial architecture.<\/p>\n

A global divide on digital currencies \u2014 stablecoins<\/strong><\/h2>\n

The UK\u2019s reserved stance contrasts sharply with the United States\u2019 more aggressive push toward regulated stablecoins. Under President Trump, stablecoin adoption has become a pillar of America\u2019s crypto policy.<\/p>\n

The GENIUS Act<\/a> has paved the way for assets like USD1, a dollar-backed Trump-affiliated stablecoin already boasting a $2.2 billion market cap.<\/p>\n

By comparison, the UK aims to modernize finance without disrupting its foundational structures, preferring a model that integrates digital finance into existing monetary infrastructure rather than bypassing it.<\/p>\n

Europe is also watching the trend with caution.<\/p>\n

Economic Governance and EMU Scrutiny Unit (EGOV)\u00a0said<\/a> recently,<\/p>\n

\n

\u201cAs a result of this growing concern with US stablecoins, the ECB has once again underscored the need for the digital euro as a possible counterweight…”<\/p>\n<\/blockquote>\n

Crime and stability concerns rise<\/strong><\/h2>\n

Bailey, who also chairs the Financial Stability Board, expanded his concerns to include financial crime.<\/p>\n

He argued that stablecoins could enable criminal activity, citing the potential for \u201cvast sums potentially moving through private stablecoin networks outside regulated channels.\u201d<\/p>\n

The lack of safeguards could fuel money laundering and destabilize the financial system during periods of market stress.<\/p>\n

His warning evokes memories of high-profile collapses like FTX and reminds us of the risks of a digital-era bank run.<\/p>\n

Is a digital pound still needed?<\/strong><\/h2>\n

Bailey also cast doubt on the need for a central bank digital currency. Instead of rushing toward a digital pound, he suggested enhancing the existing banking infrastructure.<\/p>\n

Calling it a \u201csensible\u201d approach, Bailey emphasized the benefits of focusing on digitizing commercial bank deposits, preserving banks\u2019 roles as credit intermediaries while updating payment and settlement rails.<\/p>\n","protected":false},"excerpt":{"rendered":"

Bank of England’s Andrew Bailey warns big banks not to play central banker as UK backs tokenized deposits.<\/p>\n","protected":false},"author":114,"featured_media":510804,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"footnotes":""},"categories":[66,3,4,5825,20],"tags":[6427],"class_list":["post-510793","post","type-post","status-publish","format-standard","has-post-thumbnail","category-new-news","category-news","category-social","category-stablecoins","category-trading-view","tag-ambcrypto"],"acf":[],"yoast_head":"\n'If stablecoins take money...' 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