Bank of England Takes 'Open Attitude' Towards Stablecoins for Wholesale Payments

In a proactive move, the Bank of England this week expressed a forward-looking stance on digital innovation, with its Executive Director Sasha Mills stating an 'open attitude' towards stablecoins for wholesale payments. This contrasts with the report from the Bank for International Settlements last week categorizing stablecoins as 'unreliable currencies'. Mills emphasized financial stability as a top priority, but noted that after legal revisions, the central bank must also consider innovation, leading to a more balanced regulatory approach. There is a significant policy shift: the Bank of England has relaxed restrictions on the use of stablecoins in wholesale markets for the first time, although still favoring central bank money settlement; reserve requirements in the retail sector have been eased to allow investment in high-quality assets, while proposed temporary limits on individual and corporate holdings aim to prevent deposit outflows. In a previous report, the Bank of England Governor warned that stablecoins threaten public trust in currency. (Ledger Insights)

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