Bank of England Governor Andrew Bailey has raised concerns over the growing push for stablecoin adoption, urging banks to avoid issuing their own digital currencies.
Instead, Bailey advocates for tokenized commercial bank deposits as a safer path toward digital finance integration.
In a recent interview with The Times, Bailey highlighted potential threats to financial stability if stablecoins become widespread. He warned that allowing banks to issue private tokens could weaken their lending capacity and create systemic vulnerabilities, especially during times of market stress. “If money leaves the banking system, banks have less to lend,” he stated, underscoring his fear of disintermediation.
Bailey’s comments reflect growing divergence between UK and US policy on digital assets. While the US—under President Trump—has embraced stablecoin innovation, including the rollout of the USD1 token with a $2.2 billion market cap, the UK is taking a more cautious route.
As Chair of the Financial Stability Board, Bailey also flagged stablecoins as potential vectors for money laundering, pointing to risks from unregulated digital payment rails. This contrasts sharply with the pro-stablecoin sentiment behind the GENIUS Act in the US, which paves the way for broader adoption under federal oversight.
European regulators share Bailey’s concerns. EU officials have warned that dollar-based stablecoins could threaten euro sovereignty, prompting stricter MiCA regulations and renewed interest in a digital euro.
Bailey also appeared skeptical about the need for a UK central bank digital currency. Rather than pursue a digital pound, he suggested digitizing commercial deposits would be a more “sensible” approach that preserves the core functions of the banking system.
The Bank of England’s position reflects a growing divide in global digital currency policy—between jurisdictions pushing innovation at speed, and others prioritizing systemic safeguards and regulatory control.
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
Source: https://coindoo.com/no-to-stablecoins-bank-of-england-pushes-back-on-private-tokens/