Jon Cunliffe, the Bank of England's deputy governor, has cautioned that stablecoins could pose a threat to Britain’s financial stability and may require the same level of regulation as traditional payment systems.
Speaking at the Innovate Finance Global Summit in London, Cunliffe acknowledged the excitement surrounding new currencies and payment methods but warned that they are a “fundamental issue” for the central bank.
He stated that payment systems using stablecoins should be subject to regulatory standards equivalent to those applied to traditional payments.
“We cannot know for certain the extent and the speed at which payment stablecoins might be adopted and we may well need limits, at least initially, to ensure we avoid disruptive change that could threaten financial stability”, the banker stressed.
“Changes in how we pay for things and what type of money we use is an exciting area of possibility for the fintech world… “It is also a fundamental issue for the Bank of England as a regulator, as the provider of the central high-value payment rails and the issuer of the highest quality, public money in the UK,” he said.
The Bank and the UK’s regulator, the Financial Conduct Authority, are currently consulting on a new regulatory framework to limit the use of stablecoins while touting the utility of Britcoin, a so-call central bank digital currency (CBDC).
Though built on blockchain technology, CBDCs are antithetical to cryptocurrencies in that they are centralised and issued and controlled by the government.