Bank of England Defends Temporary Stablecoin Limits as Financial Safeguard
The Bank of England has clarified its proposed caps on stablecoin holdings as transitional measures to prevent systemic risks. Deputy Governor Sarah Breeden emphasized that unchecked migration from bank deposits to stablecoins could trigger a credit crunch for businesses and households.
Proposed limits of £10,000–£20,000 for individuals and higher thresholds for corporates aim to maintain real-economy funding during the digital currency transition. "These restrictions will lift once the financial system demonstrates resilience," Breeden stated, addressing industry concerns about innovation barriers.
The November 2023 framework reflects central bankers' balancing act between embracing blockchain innovation and preserving monetary stability. Market participants await final rules as the BoE monitors potential deposit flight risks from dollar-pegged assets.
