The UK’s Treasury envisages a private wholesale stablecoin launching before a central bank digital currency (CBDC). Enabling legislation, the Financial Services and Markets Bill (FSM), covers stablecoins and is expected to pass around April. If the Bank of England launches a CBDC, the first use case is likely to be interbank settlements using a wholesale CBDC.
The news came from Andrew Griffith, the Economic Secretary of the Treasury and City minister, who was CFO and COO of broadcaster Sky until 2018. He was talking before the UK’s Treasury Select Committee yesterday.
Fnality, a venture backed by 17 major financial institutions, will likely be the first ‘wholesale stablecoin’ example, as the Treasury has already recognized it as a systemically important payment system. It provides an interbank payment system that uses a digital currency backed by deposits at the Bank of England, with plans for digital currencies in other jurisdictions, such as Europe and the United States. Fnality was due to launch in October 2022 but was delayed “to allow further time to complete relevant regulatory and onboarding work.” The regulatory work relates to the FSM Bill.
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