Bank of England Chief Warns Stablecoins May Threaten Trust in Traditional Currencies

Bank of England Governor Andrew Bailey has raised fresh concerns about the rapid rise of stablecoins, warning they could weaken public confidence in traditional money if not properly regulated.

Speaking at the Andrew Crockett Memorial Lecture, Bailey highlighted the growing influence of digital payment technologies and urged central banks to stay vigilant. "If stablecoins emerge as a new form of money," he stated, "we must consider how to preserve the 'singleness' of money and protect the public’s trust in it."

Stablecoins—digital assets typically pegged to major fiat currencies like the U.S. dollar—are gaining traction worldwide. Their growing adoption, particularly in international markets, has sparked fears of a new form of “digital dollarization,” where national economies may begin to lean on U.S.-backed digital tokens over their own currencies.

Bailey’s comments come at a time when the U.S. is advancing legislation to regulate stablecoins. U.S. Treasury Secretary Scott Bessent recently voiced support for the move, suggesting that a clearer regulatory framework could help strengthen the dollar’s role as the dominant global reserve currency amid a shifting financial landscape.

As incoming chair of the Financial Stability Board, Bailey emphasized the need to ensure the global financial system remains resilient, especially during periods of economic stress. He pointed to the modern role of official reserves in safeguarding stability during crisis events.

While digital assets continue to evolve, Bailey’s remarks underscore a broader challenge for policymakers: embracing innovation without compromising the stability and trust that underpin traditional financial systems.