3-7-2025 – Bank of England Governor Andrew Bailey cautioned that U.S. dollar-backed stablecoins could erode public confidence in traditional currencies, according to a speech delivered on Thursday. The warning highlights growing concerns about the rapid rise of stablecoins in global finance.
Bailey stressed the need for central banks to vigilantly oversee innovations in the payment sector to safeguard the monetary system. Stablecoins, pegged to assets like the U.S. dollar, have surged in popularity for their stability compared to volatile cryptocurrencies like Bitcoin. However, their widespread adoption raises risks, including potential disruptions to financial stability if trust in fiat currencies wanes. The remarks, first reported by Reuters, align with expert warnings about stablecoins’ systemic implications, particularly as their market capitalization exceeds $150 billion globally.
The Bank of England’s concerns come as stablecoins like Tether (USDT) and USD Coin (USDC) dominate crypto transactions, facilitating cross-border payments and DeFi applications. Bailey’s comments signal potential regulatory scrutiny, as central banks explore central bank digital currencies (CBDCs) to counter private stablecoin growth. The UK’s ongoing CBDC research, dubbed “Britcoin,” reflects efforts to maintain control over monetary policy amidst these shifts.
