Bank of England on a Collision Course With the US: Banks Should Not Issue Stablecoins

Key Points

1. Andrew Bailey, Governor of the Bank of England, argues that banks issuing stablecoins would remove money from the banking system, posing a liquidity threat.

2. The US government, under the Trump administration, supports stablecoins as a means to promote and extend dollar hegemony, as reflected in a January executive order.

3. European Central Bank President Christine Lagarde also warns that stablecoins could lead to the privatization of money, undermining its public good function.

4. Bailey notes the divergence in approaches: the US favors stablecoins, the ECB leans toward central bank digital currencies, and neither supports tokenizing deposits.