Andrew Bailey’s stablecoin U-turn hailed as ‘positive step’
Andrew Bailey has issued a major climb down on stablecoins after previously being accused of “killing” the country’s ambitions with “prescriptive” views.
The Bank of England governor – who has been branded a “dinosaur” by Reform’s Nigel Farage for archaic views on crypto assets – has now said the UK should “reap the benefits” of stablecoin.
The Reform leader and Richard Tice, who has taken the lead on the party’s Treasury policy, headed for a showdown meeting with Bailey last week where crypto and stablecoin were among top issues on the agenda.
Bailey previously told the Treasury committee he would need “a lot of convincing” for the use case of stablecoin.
In the same session, he said he would “question” the need “to introduce a new form of money”.
But the head of the UK’s central bank has drastically softened his rhetoric, writing in the Financial Times that it would be “wrong to be against stablecoins as a matter of principle”.
What are stablecoins?
Stablecoins, which are cryptocurrencies pegged to official currency, have been a key issue of contention for Bailey with a report from fintech industry body Innovate Finance earlier this year accusing the Bank of England of “killing” London’s stablecoin ambitions.
The report criticised proposals that said stablecoins would be subject to holding limits of as little as £20,000 while issuers would be unable to offer interest to customers and would be forced to back the assets with central bank deposits.
It also urged the bank to “publicly walk back” from the proposal and end its “bias towards incumbents and legacy systems”.
Janine Hirt, chief executive of Innovate Finance, told City PM it was “very positive” to see the Bank signalling “greater openness”.
Hirt said Bailey’s comments marked an “important step in acknowledging that the real question is less about inherent risks in stablecoin themselves”.
“We welcome both this shift in tone and the recognition that stable coins can play a valuable role in the UK economy,” she said.
“But a substantial change in approach is still needed,” Hirt continued, stating the moment was “critical” with other jurisdictions racing to sweeten their stablecoin offering.
The US’ GENIUS Act, which created a regulatory framework for stablecoins, has been viewed as a major play to ramp up the nation’s stablecoin competitiveness.
The legislation requires stablecoins to be backed 1:1 by highly liquid, low-risk assets like the dollar, increasing consumer protection and stability.
Through mandating that stablecoins are backed by U.S. assets, the act helps bolster the greenback on the global stage.
Stablecoin marks another point of contention for Rachel Reeves and the Bank governor, with the Chancellor bullish on the UK taking a slice of the over £200bn global market.
Reeves referenced plans to drive forward “developments in blockchain technology including… stablecoin” in her 2025 Mansion House speech.
Bailey said: “We will set out that widely used UK stablecoins should have access to accounts at the BoE in order to reinforce their status as money.
“This will be a critical part of creating an advanced regime for stablecoins, one that ensures the UK can reap the benefits while maintaining a stable financial system.”