Bank of England (BOE) governor Andrew Bailey has raised concerns over banks issuing stablecoins, advocating instead for the BOE to focus on tokenizing deposits. He highlighted that stablecoins could pose systemic risks to banking institutions and may destabilize the broader financial system, potentially undermining governmental control over national currencies. Bailey's warnings coincide with his new role as chairman of the Financial Stability Board, where he is likely to advocate for stricter regulations on stablecoins. The discussion around stablecoins is intensifying globally, particularly as U.S. officials, including Treasury Secretary Scott Bessent and Federal Reserve chairman Jerome Powell, promote stablecoin regulations, emphasizing their potential to support the dollar’s status as the global reserve currency. However, European officials express concerns that U.S. dollar-denominated stablecoins could threaten the EU's financial stability. The debate continues as stablecoins grow in popularity and complexity, necessitating a careful regulatory approach.

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