Today the Bank of England published its policy position and draft code of practice for systemic stablecoin issuers. The central bank’s previous proposals received significant pushback, particularly regarding holding limits and central bank reserves, where it has relaxed its stance.
First, there were many objections to proposed holding limits of £20,000 for individuals and £10 million for businesses. This was seen as operationally tricky to implement, especially as the caps are only intended as a transition measure. Instead, the Bank of England will initially impose a £40 billion cap on each systemic stablecoin issuance.
The Bank of England had previously proposed that systemic stablecoin issuers would have to hold 40% of their reserves at the central bank, unremunerated. The goal is to enable the rapid redemption of a large proportion of the issuance in the event of a run. The Bank of England has now reduced that to 30% of reserves, which remain unremunerated.
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