Bank of England Governor Warns Against Stablecoins, Backs Tokenized Deposits Instead

Bank of England Governor Andrew Bailey has voiced strong concerns about the rising push for stablecoin adoption, calling on banks to steer clear of issuing their own digital currencies.

In a recent interview with The Times, Bailey argued that tokenized commercial bank deposits offer a safer and more stable path for integrating digital finance into the traditional banking system.

Stablecoins threaten lending and stability, Bailey says

Bailey warned that widespread stablecoin adoption could severely disrupt traditional banking. “If money leaves the banking system, banks have less to lend,” he explained, highlighting fears of disintermediation and reduced credit capacity. He emphasized that allowing banks to issue private digital tokens could pose systemic risks, especially in periods of market stress.

Regulatory divergence: UK caution vs US enthusiasm

As Chair of the Financial Stability Board, Bailey also cited concerns over the use of stablecoins in money laundering, particularly through unregulated digital payment systems. His comments contrast with recent moves in the US, where the GENIUS Act seeks to formalize stablecoin regulation under federal oversight.

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No rush for a digital pound

Bailey further cast doubt on the urgency of launching a UK central bank digital currency (CBDC). Instead of a digital pound, he proposed digitizing existing commercial bank deposits—a move he described as a more “sensible” option that avoids unnecessary disruption to the banking system’s core functions.

Kosta Gushterov

Kosta has been working in the crypto industry for over 4 years. He strives to present different perspectives on a given topic and enjoys the sector for its transparency and dynamism. In his work, he focuses on balanced coverage of events and developments in the crypto space, providing information to his readers from a neutral perspective.