Bank of England Does a U-Turn on Stablecoins: Now They’re Friends?

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Oh, darling, the twist you didn’t see coming. Buckle up, because the Bank of England decided to adopt a softer, sweeter stance on those pesky stablecoins, courtesy of some inspiration from our American pals. 🇺🇸 Now, they’ve published a proposal that practically showers these digital darlings with attention. 🙌

In the latest headline-making drama, the Bank of England (self-styled as our nation’s financial BFF) released a piece of literature – apparently not a novel or my TBR list – titled “Proposed Regulatory Regime for Sterling-Denominated Systemic Stablecoins.” This little document dares to propose letting issuers have a bit of fun by investing up to 60% in government debt. How mature. 📈

Bank of England’s Proposals: It’s All about the Systemic Stablecoins

On the 10th of November (I know, numerology much?), our illustrious BoE dropped a consultation paper spilling the tea on its grand plans for these sterling-denominated digital giants. It’s a reimagined future, my friends, where digital payments are as common as me forgetting to block Nigel on social media. Lovely for the British people, certainly.

The narrative behind these proposals became known after the Bank munched on a hearty helping of feedback from its November 2023 Discussion Paper Discourse-a-Thon. As they say, “We heard you, oh, Barclays bonus buyer!” The BoE plans to let public opinion marinade before wrapping up their rulebook on stablecoins by 2026. This, again, is about maintaining trustworthia in the rapidly hippezing payment ecosystem. 💸📚

According to the newfangled strategy, the BoE schemes around only consider those systemic stablecoins. Non-systemic ones are tossed over to the Financial Conduct Authority (FCA) to deal with. It’s like deciding who in your Fiction Friday group writes the horror versus romance themes. If any stablecoins rise to the illustrious “systemic” level, buckle up for BoE and FCA tandem supervision. Picture it: tax season with no paperwork. 🧐📉

Proposals Covered: Why, It’s Groundbreaking!

The Consultation Paper, reminiscent of a well-worn undergraduate love letter, shares an ambitious vision for the future of backing assets and holding limits for these sterling-backed beauties. In its wisdom, the BoE decided that systemic stablecoin issuers could hold business casual-level-60% in UK government debt. The rest? Locked in an unglamorous, but oh-so-necessary BoE account.

If these stablecoins land the ‘systemic’ role, they start off with a ‘95% security blanket’ snuggle of government debt. It’s all about baby steps – or at least baby bonds. And what’s this? A proposal for central bank liquidity lifejackets to buff up during the stormy seas of financial gymnastics. Imagine pre-crash pints, only for the economy. 🥀🍺

For those craving more specifics, there’s a glimpse at holding limits that scream “saving grace” – £20,000 for individuals and a cool £10 million for businesses! It’s meant to keep the credit machine churning like a fresh cuppa in the Great British afternoon.

In the spirit of reflection, Sarah Breeden, Deputy Governor for Financial Stability at the BoE (sounds like a spell from Harry Potter) had a few words in their stylish press release:

“Today’s proposals mark a pivotal step towards implementing the UK’s stablecoin regime next year. Our objective remains to support innovation and build trust in this emerging form of money. We’ve listened carefully to feedback and amended our proposals for achieving this, including on how stablecoin issuers interact with the Bank of England. These proposals are fit for a future where stablecoins play a meaningful role in payments, giving the industry the clarity it needs to plan with confidence.”

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2025-11-11 10:08