Andrew Bailey, the governor of the Bank of England (BOE), has raised alarm over the increasing prevalence of banks creating their own stablecoins, highlighting the considerable systemic risks these digital currencies pose to the broader financial framework.
In an interview with The Sunday Times, Bailey expressed a clear preference for tokenized bank deposits over privately issued stablecoins, cautioning that the latter could lead to a withdrawal of funds from the banking system and impact the overall process of credit creation.
By championing tokenized bank deposits, Bailey is advocating for a more cohesive and regulated digital financial landscape that complements traditional banking operations.
“I would much rather [banks] go down the tokenized deposit routes and explore how we can digitize our money, especially concerning payments,” he remarked.
His remarks come amid a period of substantial growth in the stablecoin market, which has surged from $125 billion less than two years ago to approximately $255 billion today, according to a recent report from the Bank for International Settlements (BIS).
UK’s Stance on CBDC Contrasts with US and ECB
Moreover, Bailey articulated his belief that the UK should refrain from adopting a central bank digital currency (CBDC), often referred to as a ‘digital pound.’ He deemed it “sensible” for the UK to focus instead on digitizing existing deposits.
In addition, Bailey recently took on the role of chairman of the Financial Stability Board (FSB), an influential international financial regulatory body.
His views also diverged from those of the Trump administration regarding the endorsement of stablecoins.
“I would say that the US is moving towards stablecoins while the European Central Bank is leaning towards a central bank digital currency. Neither approach is considering tokenizing deposits,” he noted.
US Embraces Crypto Legislation
On the other side of the Atlantic, the US House Financial Services Committee has announced the commencement of ‘Crypto Week,’ starting Monday, which will focus on exploring three significant cryptocurrency bills, including the GENIUS Act aimed at regulating stablecoins.
Mid-July has been designated as ‘Crypto Week’ by US lawmakers in an effort to establish a transparent regulatory framework for digital assets while safeguarding financial privacy. #USLawmakers #CryptoWeek #CryptoRegulations https://t.co/yhbiz4tMwr
— Finance Newso.com (@Finance Newso) July 4, 2025
In a related context, US Treasury Secretary Scott Bessent remarked at the White House Digital Asset Summit in June that stablecoins could potentially “reinforce dollar supremacy.” Meanwhile, Federal Reserve Chair Jerome Powell has also underscored the urgency of regulating stablecoins to protect consumers effectively.
However, Governor Bailey contends that stablecoins warrant careful scrutiny, emphasizing that their proposed characteristics align closely with those of traditional money. “Stablecoins are intended to embody the attributes of money, which serves as a medium of exchange. Thus, they must retain their nominal value,” he stated.
He additionally voiced worries that an expanded presence of stablecoins might erode central banks’ sovereign control over monetary policies.
Turning his attention to Bitcoin, Bailey pointed to its extreme price volatility as evidence that it is an “unbacked asset.”
“It’s not money, it lacks the functions of money, and if you intend to purchase it, you should do so with full awareness of the risks involved,” he cautioned potential investors.
The response from Bailey underscores the ongoing debate surrounding the role and implications of digital currencies within the global financial landscape.
