Financial regulators need to avoid playing catch up with electronic payment methods such as stablecoins and crypto-assets, the Bank of England’s new Governor Andrew Bailey has said.
Stablecoins continue to be a relatively niche corner of the cryptocurrency world that hardly featured on policymakers’ agendas until Facebook unveiled its Libra stablecoins last year.
Central banks and financial regulators feared Libra — planned as a stablecoin backed by a wide mixture of currencies and government debt — could destabilise monetary policy and facilitate money laundering, with some threatening to block it.
“If stablecoins are to be widely employed as a way of payment, they need to have equal standards to those which are in place today for different kinds of payment forms and also the types of cash transferred through them,” Bailey said in a speech to the Brookings Institution.
Existing regulatory standards must be examined and updated where necessary in light of stablecoins, he said, calling for a clear G20 mandate for standard-setting bodies to refresh or clarify standards.
Any stablecoin based on the pound that was launched in Britain should meet standards similar to those applied to banks, Bailey said. The issuer of such a coin would need to be based in Britain, he added.
“If a sterling retail stablecoin wishes to function at scale in the UK, then we’ll strongly consider the need for a thing to be incorporated in the UK.”
This type of requirement might affect plans for Libra.
In April the Geneva-based Libra Association, that will issue and govern the planned stablecoin, said it might offer stablecoins predicated on a still-undecided line-up of respective monies, citing those predicated on the dollar, euro and sterling as possible examples.
The team at Platform Executive hope you have enjoyed the ‘Bank of England says regulators must stay ahead of stablecoins‘ article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Huw Jones. Editing by Tom Wilson and Alison Williams.
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