BOE’s Bailey Warns Against Bank-Issued Stablecoins, Clashes With U.S. Crypto Sentiment

Bank of England Governor Andrew Bailey has issued a stark warning to global investment banks about the risks of developing proprietary stablecoins, framing them as a potential threat to financial stability. His comments, made in an interview with The Times, stand in direct opposition to the TRUMP administration's pro-crypto stance, which has fostered expectations of lighter U.S. regulation.

Bailey expressed DEEP skepticism toward stablecoins—digital assets pegged to traditional currencies like the dollar—arguing they lack the safeguards of conventional bank deposits. "Stablecoins are proposed to have the characteristics of money," he said. "They must maintain their nominal value, and we'll scrutinize them through that lens." The BOE governor fears these assets could divert funds from the banking system, undermining credit creation and monetary policy control.

Instead, Bailey advocated for tokenized deposits—digitized versions of existing money that remain under regulatory oversight. He suggested the U.K. may benefit more from upgrading digital banking infrastructure than pursuing a central bank digital currency.