What to know:
- Bailey, the wise old owl of the Bank of England, advises banks to stick to tokenized deposits, not their own stablecoins, to keep the financial ship afloat and the monetary rudder in control. 🚤
- The U.S. Genius Act, a brainchild of the Trump administration, might just turn the tables, allowing giants like JPMorgan and Citi to mint their own digital gold, widening the gap between global financial watchdogs. 🤔
Bank of England Governor Andrew Bailey, a man who has seen more financial storms than a lighthouse, has issued a stern warning to global investment banks: steer clear of developing your own stablecoins, for they pose a perilous threat to the stability of the financial seas. 🌊
In a candid interview with The Times, Bailey’s words cut like a sharp wind against the warm breeze of support for crypto initiatives from the Trump administration, which has been busy painting a rosy picture of a friendlier regulatory climate. 🌸
Bailey, ever the skeptic, casts a wary eye on stablecoins, those digital tokens that claim to be as solid as the dollar. He argues that these tokens lack the robust safeguards of traditional bank deposits and could drain the lifeblood from the banking system, weakening the very fabric of credit creation and monetary policy. 💰
“Stablecoins are proposed to have the characteristics of money,” Bailey intones, his voice a mix of caution and resolve. “That money is a medium of exchange. Therefore, they really do have to have the characteristics of money and they have to maintain their nominal value. We are going to have to look at it very closely through that lens. It’s both a financial stability issue and a money issue in that sense.”
Instead of chasing the crypto chimera, Bailey urges banks to explore the safer shores of tokenized deposits, a digital version of existing money that remains firmly under the watchful eye of regulators. He hints that the U.K. might find it more prudent to fortify its digital banking infrastructure rather than dive headfirst into the uncharted waters of a central bank digital currency (CBDC), a path the European Central Bank seems eager to tread. 🏦
As Bailey’s warnings echo through the halls of finance, the U.S. Congress is on the brink of passing the Genius Act, a bill that could allow commercial banks to issue their own stablecoins. JPMorgan and Citi, sensing the winds of change, are reportedly ready to set sail, anticipating a surge in digital finance under looser regulatory skies. Meanwhile, cryptocurrencies like bitcoin have been riding high on the wave of speculation over more lenient policies in the world’s largest economy. 🚀
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2025-07-14 14:33