Yesterday both the UK Chancellor Rachel Reeves and the Governor of the Bank of England Andrew Bailey gave speeches at Mansion House that mentioned stablecoins. The Governor highlighted the “urgent need” for innovation in payments and the opportunity this presents. He said, “There may well be a role for stablecoins going forward, but I don’t see them as a substitute for commercial bank money.”
The key reason is that bank deposits enable banks to advance credit. In another recent speech, he urged banks to avoid issuing stablecoins, with the same motivation. He added that “our job will be to ensure that those stablecoins that purport to be money are safe.” As he’s stated a few times before, he remains to be convinced about the need for a retail central bank digital currency (CBDC).
Other parts of his speech focused on global trade and tariffs, including comments intended as “constructive challenge and engagement”. He said that the “US does need to explain how it can regard its internal imbalance as sustainable and its external imbalance as not so.” Although the Governor didn’t mention it, there’s a stablecoin angle here as well, relating to the management of US debt.
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