Bank of England Skepticism Of Stablecoins

In an interview with British media house The Times, the Governor of The Bank of England issued a warning to the world's leading banks against launching their own stablecoins, arguing that such crypto assets threaten global financial stability and undermine the traditional nature of money.

In a recent interview with The Times, Bailey pointed to tokenised deposits-the digital versions of conventional bank deposits—as a preferable option for modernizing payments, rather than private sector stablecoins or even central bank digital currencies (CBDCs).

Bailey emphasized the importance of digitizing traditional money within the regulated banking system, stating

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

Highlighting distinctions in global policy, Bailey noted that the United States is leaning towards stablecoins, while the European Central Bank is prioritizing CBDCs.

“Neither of them is going towards tokenising deposits.”

Bailey stressed his belief that tokenised commercial bank deposits could offer a more secure and efficient payments framework without introducing the risks posed by privately issued digital currencies.

Bitcoin Isn't Real Money

Bailey, who also chairs the Financial Stability Board, reiterated his skepticism toward cryptocurrencies like Bitcoin.

He expressed a stern warning to potential investors, saying

“It’s not money, it doesn’t have the function of money."

The BOE governor also emphasised that investors who choose to buy Bitcoin should do so with caution and know the full risk associated with Bitcoin before jumping into a investment.

This statement comes as Bitcoin broke its all-time high of $120 on July 14 reaching a new all time high of $123,191.

He has previously described non-stable cryptocurrencies as “pure investment risk,” urging caution to those considering such digital assets.

England Diverging From The Ways Of U.S and The EU

Bailey’s comments were made in the lead-up to significant legislative activity in the US, where Congress is preparing to debate crypto policy as part of what has been called “Crypto Week.”

Lawmakers will consider the GENIUS Act, which aims to make it easier for companies and banks to issue stablecoins, and may also discuss bills covering broader market regulation and the potential prohibition of a Federal Reserve CBDC.

While open to the idea of digital assets for payments, Bailey signaled support for strict regulatory standards on stablecoins

“I think we will have to set a high bar for stablecoins because the expectations are that people using things for payments, are appropriately set like money.”

Bailey’s stance highlights the ongoing debate among global regulators about the safest and most effective ways to modernize money.

His advocacy for tokenised deposits positions the Bank of England as a cautious, but innovative, player in the evolving world of digital finance—focusing on preserving monetary stability while ensuring payments innovation remains grounded in the traditional financial system.