‘If stablecoins take money…’ Does BoE Governor’s prediction hold weight?

Key Points

1. BoE Governor Andrew Bailey warns that private digital currencies (stablecoins) could destabilize the financial system by reducing banks' deposit bases.

2. The BoE prefers tokenized deposits over privately issued stablecoins, as they operate within the regulated financial system.

3. The U.S. has embraced stablecoins as part of crypto policy, exemplified by the GENIUS Act and USD1, a Trump-affiliated stablecoin with a $2.2B market cap.

4. Bailey raises concerns about crime and instability linked to stablecoins, referencing past collapses like FTX and risks of digital-era bank runs.

5. The ECB has reiterated the need for a digital euro amid growing concerns over U.S. stablecoins.