The Bank of England (BoE) believes there should be stricter rules for stablecoins if these payments start to become widely used, Reuters has learned, citing the bank's statement. The BoE Governor, Andrew Bailey, alarms that the prospect of stablecoins as a means of payment and the emerging propositions of central bank digital currencies (CBDC) "have generated a host of issues."
Subscribe to our Telegram channel to stay up to date on the latest crypto and blockchain news.
"It is essential that we ask the difficult and pertinent questions when it comes to the future of these new forms of digital money," he added.
The watchdog also simulated a scenario where a fifth of money held as retail deposits with British banks instead was held in digital currencies like stablecoins or a CBDC. The bank found that such a change would "push up" banks' funding costs and raise the interest rates they charged by about 0.2 percentage points. However, the BoE believes that the impact on lending rates and credit provision was likely to be "relatively modest".
As iHodl earlier reported, British finance minister, Rishi Sunak, called the BoE for issuing its own "Britcoin", a digital version of sterling. The digital currency would help businesses and consumers to sidestep financial intermediaries as their accounts would be stored on the BoE's platform, Sunak said.
Access more than 50 of the world's financial markets directly from your EXANTE account – including NASDAQ, London Stock Exchange and Tokyo Stock Exchange.