• Andrew Bailey, Governor of the Bank of England, states that stablecoins need to be regulated in the same way as traditional money.
• Stablecoins lack an „assured value,“ and financial stability needs to be ensured with a strict regulatory framework.
• Regulators should consider appropriate liquidity buffers to respond to banking crises or bank runs.
Stablecoins Should Meet Same Regulations as Real Money
The Bank of England believes that stablecoins need to be properly supervised to ensure financial stability. On April 12th, Andrew Bailey, governor of the Bank of England, stated during a press conference at the Institute of International Finance in Washington that stablecoins should be regulated in the same way as fiat money. According to Bailey, stablecoins lack an “assured value” which is one of the main characteristics people look for when investing in this type of digital money that seeks to resemble fiat currency. He argues that because of this, proper regulations are needed in order for it to function properly: “As we have seen, they [the stablecoins] do not have assured value, and in the work we have done at the Bank of England we have concluded that the public should expect assured value in digital money, and confidence in this is needed to underpin financial stability.”
Are Tokens Real Money?
Andrew Bailey warned that stablecoins must meet the same characteristics and regulations as real money if they are going to function properly as such. This situation has not yet happened with any stablecoin currently available on the market today. Furthermore he noted that regulators should consider all appropriate liquidity buffers in order to respond to any banking crisis or bank run such as what recently happened with Silicon Valley Bank which affected thousands of investors worldwide .
Regulations Needed for Stable Coins
Currently The Bank Of England is working on creating a framework for regulating stable coins so that it can maintain its status as being real digital money similar how regular currencies are regulated by governments around world . To do this they will need create certain standards like capital requirements , reserve requirements , transparency criteria etc., so these standards can maintained if they want remain viable form payment . Additionally , they will also need make sure any potential risks involved using these types tokens are factored into equation , such issues related privacy security etc.,
Conclusion
In conclusion , The Bank Of England believes that it is important regulate cryptocurrencies like other forms real money order ensure financial stability world over . They believe stringent regulations must place them so public can trust use them safe manner without worrying about potential losses due unforeseen circumstances . If done correctly , this could lead greater adoption cryptocurrencies well greater trust from general public which could ultimately result more widespread acceptance future .
References
[1] “StableCoins Should Meet Same Regulations As Real Money :Bank Of England” Cryptobriefing (April 13th 2021) https://cryptobriefing.com/stablecoins-should-meet-same-regulations-as-real-money-bank-of-england/