The Governor of the Bank of England, Andrew Bailey, has Thursday, September 4, explained what financial regulators need to do ‘if stablecoins are to be widely used.’
Expressing his fear on the possible impacts of stablecoins on economy if not curtailed, Bailey said regulator must try to stay ahead of stablecoins and other crypto assets as the world gradually evolves into the digital economy.
He explained that not until Facebook planned the launch of its stablecoin project, Libra, last year, policymakers rarely include stablecoins in their agenda since it is an entity of the cryptocurrency world.
Baily said that the emergence of Facebook’s Libra project daunted financial regulator and a number of central banks across the world, as they believed that the crypto-oriented project will help enhance money laundering just like some other cryptocurrencies, and it could likely cause disability to the monetary policy. Hence, they did not grant the project headways, and some even threatened to block it off.
While explaining some of the conditions to be met, Bailey said Stablecoins must possess the same standard as the existing form of payment, and money moved through them if they were ‘to be widely used’ as payment means.
The Governor cited the launch of a stablecoin in Britain as an example. He said such stablecoins would have to meet the standards that applied to banks, and the establisher of the project would have to be based in Britain.
He further elucidated that for the project to operate at scale within the United Kingdom, an entity would be incorporated in the UK.
Bailey who previously served as the Chief Executive Officer of the Financial Conduct Authority (FCA), said these standards will impact the plans of the Facebook project.
According to Reuters, Bailey gave the recommendation during a speech to the Brookings Institution.
The British central banker who became the governor of the England bank in mid-March said updating and examining the standing regulatory standards should also be done in the view of stablecoins.
He then called for a clarification of the existing standards.
Earlier the body that will be responsible for the launching and governing of the Libra project, Libra Association, said its stablecoins would be offered based on a number of individual currencies, but are still yet to be decided.