BoE’s Andrew Bailey Hits the Brakes on Bank-Issued Stablecoins, Bets on Tokenised Deposits

Andrew Bailey, Governor of the Bank of England (BoE), has warned that allowing commercial banks to issue their own stablecoins could undermine national monetary control and destabilise the financial system. In a recent interview with The Times, Bailey argued that tokenised deposits offer a far more secure route for modernising financial infrastructure while retaining its core functions.

I would much rather [banks] go down the tokenised deposit streets and say, how do we digitise our money, particularly in payments.

Andrew Bailey, Governor of the Bank of England

According to Bailey, stablecoins pose systemic risks that may undermine a nation’s monetary authority, especially if widely adopted. Rather than support either privately issued stablecoins or the creation of a UK central bank digital currency, he indicated a preference for digitising existing commercial bank deposits.

As chair of the Financial Stability Board, Bailey is in a position to shape international regulatory frameworks. He indicated that under his leadership, stablecoins will be subject to strict scrutiny due to their potential to bypass established oversight mechanisms.

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UK Diverges from US on Digital Currency Strategy

Bailey’s stance comes amid a stark divergence between UK and US policy approaches. While the UK is focused on ensuring that digital innovations align with traditional monetary systems, the US, through legislation such as the GENIUS Act, is actively encouraging stablecoin adoption. The act paves the way for banks and corporations to issue stablecoins backed by liquid assets, such as US Treasuries.

He also raised concerns about the potential for money laundering via stablecoin networks that operate outside of regulatory supervision. Bailey noted that without adequate safeguards, these systems could be exploited for criminal activity.

Bailey also scrutinised Bitcoin, stating it is a speculative asset lacking the essential attributes of money and advised buyers to proceed only with full awareness of its risks. At the time, Bitcoin had climbed to an unprecedented price of US$119,450 (AU$181,514).

It’s not money, it doesn’t have the function of money, and if you’re going to buy it, please buy it with your eyes open.

Andrew Bailey, Governor of the Bank of England

In Bailey’s view, tokenised deposits offer the best of both worlds: enabling digital transformation while preserving central banks’ ability to manage the economy. His remarks signal the BoE’s firm commitment to cautious and structured financial reform.

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