BoE – Bank of England governor has recently added that stablecoins required global regulation, warning private issuers that a global regulatory framework could soon be within the cards.
Governor Andrew Bailey added that regulators need to come together for a “global response” in order that they can effectively regulate stablecoins.
While recently stating, he added that the international nature of stablecoins, which may be based in one country and operate in another, meant failure to coordinate could end in confusion as well as regulatory fragmentation.
Bailey addressed an audience at the Hutchins Center on Fiscal & Monetary Policy of the Brookings Institution – a think factory that has called on policymakers to plan regulations for crypto assets.
Within his recent speech, he added: “Host regulators of worldwide stablecoins must, and are, working with other regulators in other jurisdictions to make sure that they’re appropriately regulated and gaps in coverage, opportunities for regulatory arbitrage, don’t emerge.”
While Bailey recognized stablecoins could reduce frictional costs, he emphasized that non-public issuers had to work more to make sure users can always redeem their stablecoins in the ratio of 1:1 with the underlying fiat asset.
He also warned that future stablecoin offerings may need to do more to satisfy regulatory standards at both a local and global level.
Compared to bitcoin, which he described as wholly unsuitable for payments, he added that some stablecoin proposals could become the first means for buying goods & services.
However, speaking about Facebook’s libra coin, he said discussions about multi-asset stablecoins were presently premature.
The BoE has previously toyed with the thought of launching a digital pound – even suggesting private firms could play a task in issuance.
It also joined a working association with five other central banks and the Bank of International Settlements [BIS] at the starting of this year.