The Governor of the Bank of England called for the introduction of standards on stablecoins – a type of cryptocurrency – to make them “safe and resilient” for the public.
“If stablecoins are to be widely used as a means of payment, they must have equivalent standards to those that are in place today for other forms of payment types and the forms of money transferred through them,” said Andrew Bailey, speaking during a 3 September webinar hosted by US-based think-tank Brookings Institution.
Stablecoins are a type of cryptocurrency that are pegged to the price of a fiat currency or a basket of assets, to try to limit their volatility. In June 2019, social media giant Facebook launched its own cryptocurrency project which would allow users to send and store its stablecoin, Libra
Standards should be set early on, “so that innovation can take place with confidence on what will be required,” he said. The expectations would “help avoid regulatory fragmentation.”
“There needs to be a clear G20 mandate for the various sectoral standard-setting bodies to consider their standards and whether they need to be refreshed or clarified in light of stablecoins,” Bailey said.
The move, which turned heads in the financial sector and ruffled the feathers of regulators, saw a British parliamentary committee announce that it would probe the tech behemoth’s new cryptocurrency over fears it would grant it too much power.
Cryptocurrencies, which are digital tokens underpinned by blockchain technology, have seen turbulent prices, mirroring stocks, despite being hailed as a safe-haven asset amid the volatility of the Covid-19 pandemic.
Separately, in July, the governor had said that the central bank is considering whether or not to create a digital currency. Speaking at a Speakers for Schools webinar, he had told the listeners: “we’ll go on looking at it, as it does have huge implications on the nature of payments and society.”
At the start of the year, the Bank of England joined an international working group of central banks, including the European Central Bank and the Swiss National Bank, exploring the potential of state-administered digital currencies in their home markets.
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