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Bank of England Governor Prefers Tokenized Assets Over Stablecoins
Bank of England Governor Andrew Bailey has warned about the risks of banks issuing stablecoins, stating that it could lead to money being withdrawn from the banking system.
In an interview with The Times, Bailey said he would rather support tokenized deposits, which he considers an intermediate form of representing real fiat money on the blockchain. Unlike stablecoins, they are backed by deposits in private banks.
He also pointed out that stablecoins pose “both a financial stability problem and a money problem,” since they “must have the characteristics of money and maintain their nominal value.”
In his view, stablecoins drain liquidity from the banking sector and could negatively impact lending systems in the future.
The Bank of England’s stance contrasts with that of the U.S. government, which in a January executive order recognized stablecoins as a tool for “promoting and protecting the U.S. dollar’s sovereignty” at the international level.
In this regard, Bailey’s comments align with the concerns of European Central Bank President Christine Lagarde, who has argued that stablecoins could lead to the privatization of money and undermine its function as a “public good.”
See also: "Bank of America Names Bitcoin the Most Profitable Currency of 2025"
