Bank of England governor Bailey rebuffs crypto ‘stablecoins’ as form of safe money

The governor of the Bank of England has slapped down claims that volatile crypto “stablecoins” could develop into a form of safe money. 

Speaking today in response to a grilling by members of the House of Lords, Andrew Bailey swatted away insistence from the crypto community that stablecoins are a better alternative to central bank digital money.

The Old Lady’s chief also gave a grave assessment of the scale of damage cryptocurrencies could inflict on the global financial system if they infiltrate the world’s money system.

Bailey warned that cryptocurrencies and crypto assets do have “all the potential to be a threat to financial stability which is why we think we do need to take action.”

The Old Lady’s chief also gave a grave assessment of the scale of damage cryptocurrencies could inflict on the global financial system if they infiltrate the world’s money system.

Bailey warned that cryptocurrencies and crypto assets have “all the potential to be a threat to financial stability which is why we think we do need to take action” such as creating a central bank digital currency.

“Stablecoins” are cryptocurrencies that are pegged to another asset that is less volatile, such as the dollar. They are intended to offer investors safer exposure to the cryptomarket.

Bailey told the House of Lords’ Economic Affairs Committee that the “better alternative” to letting “stablecoins” fill the vacuum of digital money would be using a central bank currency in “digital form”.

Bailey warned that allowing the private sector to manage the shift toward digital currency could result in the Bank of England regulating big tech firms.

“The question we’re going to face is… would we try to regulate” private tech firms creating digital money, he said.

His remarks come as the Old Lady and the treasury earlier this month set out a timeframe to launch a consultation into whether central bank digital currencies should be introduced in the UK.