Bank of England to Gain Enhanced Authority in Regulating Stablecoins
Bank of England strengthens oversight of systemic stablecoins, in collaboration with FCA, balancing innovation with financial security
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The government of the United Kingdom (UK) is contemplating a potential power rebalancing between the Bank of England (BoE) and the country's principal financial regulator, the Financial Conduct Authority (FCA). This information was revealed through a 40-page consultation response published by His Majesty's Treasury.
The consultation, initiated under the title "Payments Regulation and the Systemic Perimeter" in 2022, aimed to gather market proposals concerning restructuring the BoE's payments perimeter. The evolving landscape of financial stability risks prompted this move.
Reactions from stakeholders have been encouraging, with notable industry players such as PayPal, HSBC UK, Circle, and Barclays providing favourable feedback during the consultation process. The consensus emerged around extending an accountability framework to encompass systemic stablecoins, reflecting a commitment to robust governance.
Under the proposed measures, the BoE could gain the authority to prevent the FCA from intervening in stablecoin provider affairs. Additionally, the Prudential Regulation Authority could step in to prevent FCA actions that might lead to financial stability concerns.
In a separate context, BoE Governor Andrew Bailey commented on cryptos and stablecoins, asserting that they fail fundamental tests of singleness and settlement finality and should not be categorised as money. He proposed the development of "enhanced digital money" instead.
