In an interview with UK newspaper The Times, the Governor of the Bank of England, Andrew Bailey, warned the world’s largest banks not to issue stablecoins. Notably, Standard Chartered has already announced stablecoin plans in Hong Kong, but is headquartered in the UK, with the Bank as its regulator.
StanChart is not the only systemically important bank to lean into stablecoins. Société Générale FORGE, a subsidiary of the French bank, has already issued one, and Deutsche Bank’s asset management arm DWS is a joint venture partner in stablecoin issuer AllUnity. Additionally, Santander and ING are reported to be exploring the topic, but haven’t made formal announcements.
Rather than issuing stablecoins, Governor Bailey would prefer that banks stick to tokenized deposits, in part because they are blockchain equivalents of conventional deposits. These support bank lending activities, whereas stablecoins require ringfenced reserves that cannot be used for lending. A lack of credit severely affects economic growth.
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