BoE Governor Warns Stablecoin Boom Could Undermine Monetary Trust – Central Banks on Alert

Bank of England Governor Andrew Bailey has issued a stark warning about the rise of stablecoins, suggesting they could erode trust in traditional monetary systems if left unchecked. Speaking at the Andrew Crockett Memorial Lecture, Bailey emphasized that the very definition of reserve currencies is evolving—shifting from convertibility to liquidity and safety underpinned by assets like U.S. Treasuries.

The rapid growth of stablecoins poses a systemic risk, Bailey argued, particularly if adoption outpaces regulatory frameworks. Central banks must reassess their roles in an era of payment innovation and cross-border liquidity challenges. Reserves now function as a buffer during financial stress rather than a tool for currency pegs, reflecting broader changes in global finance.

Bailey’s remarks highlight a pivotal moment for monetary policy as digital assets redefine financial infrastructure. The speech underscores the tension between innovation and stability, with regulators scrambling to keep pace with disruptive technologies.