In a recent public webinar, the Governor of the Bank of England (BoE) argued that stablecoins need global regulation, warning private issuers that an international regulatory framework may soon be approved.
A "global response" to stablecoins
Governor Andrew Bailey said politicians must come together to come up with a "global response" that can effectively regulate stablecoins. He stressed that the international nature of stablecoins, which can be based in one country and operate in another, means that lack of coordination between nations could lead to regulatory confusion and fragmentation.
Bailey spoke on the subject during a webinar at the Brookings Institution's Hutchins Center on Fiscal & Monetary Policy, where policy makers involved in drafting cryptocurrency regulations were invited.
In his speech, Bailey said, "Global stablecoin regulators must and are already working with other regulators in other jurisdictions to ensure that they are properly regulated and that no coverage gaps or regulatory arbitrage opportunities emerge."
Although Bailey acknowledged that stablecoins could reduce attrition costs, he pointed out that private issuers need to do more to ensure that users can always redeem their stablecoins with the underlying fiat currency, according to the 1: 1 ratio. .
He also warned that future stablecoin offerings may need to do more to meet regulatory standards nationally and internationally. Stablecoins "could offer some useful benefits - Bailey suggested - once consumers can use them with confidence."
The benefits of the Governor-nominated stablecoins were to "further reduce payment friction by increasing the speed and lowering the cost of payments", as well as offering the "convenience of integration with social media platforms or retail services", he has declared.
Bitcoin and Libra
Bailey quoted Bitcoin in the first part of the speech, saying, “I would like to start by talking about crypto assets like Bitcoin that have appeared over the past decade. They have no connection with money ... their value can fluctuate widely, unsurprisingly.
They seem to me fundamentally unsuitable for the world of payments where certainty of value is important ”. He added that some stablecoin proposals could become the primary means of purchasing goods and services.
Hinting at a possible inference with Facebook's Libra coin, which could also be found on Bitcoin system, argued that discussions on multi-asset stablecoins are currently premature. “[A] starting point for stablecoins should be based on single currencies.
We don't run before we can walk, ”he said. The BoE has already toyed with the idea of launching a digital pound, also suggesting that private companies could play a role in the issue. Earlier this year, the bank also joined a working group with five other central banks and the Bank for International Settlements (BIS).
