Sarah Breeden, Deputy Governor of the Bank of England has stated that central bank plans to limit stablecoin transactions and holdings will be temporary measures to maintain stability of the financial system.
Limits on the use of stablecoins The idea was first raised in a 2023 November discussion paper As a way to maintain financial stability. As plans progressed, industry groups lashed out in SeptemberThey argue that these policies would limit innovation and growth.
Breeden said this in an address at DC Fintech Week, which took place on Wednesday. said The limits are only temporary and will be lifted when the bank wants them to. “support a role for stablecoins as part of a multi-money system.”
Breeden stated that the measures would allow for the “structure of real-economy financing to adjust” Stablecoins are a great way to ensure that the bank is able to accept them. “monitor adoption of stablecoins and assess the potential for rapid changes in the structure of the financial system.”
“So let me be clear. We would expect to remove the limits once we see that the transition no longer threatens the provision of finance to the real economy.”
Industry groups are widely available criticized the proposed limitsThe previous range was between $10,429 to $26,858, or 10,000 to 20,000 British Pounds. They argued that this would signal to other businesses in the industry that UK is not a crypto friendly jurisdiction.
Stablecoin regulations aren’t set yet
Breeden stated that the BOE will launch a consultation by the end of this year to solicit feedback regarding the limits and the path towards implementation.
“We will be consulting in coming weeks on the detail of our proposed regime for sterling stablecoins used in systemic payment systems, and we’ll be open to feedback as we finalize our rules,” “She said”
A proposal is being circulated that would increase the limit on businesses, and exempt supermarkets and large corporations.
Carve outs for Companies operating in the country’s digital sandboxLaunched in October 2024, the test ground will be able to provide a better understanding of how autonomous vehicles work. digital ledger technologyDiscussions are also taking place regarding.
Stablecoins are causing concern for banks that their system cannot keep up.
Breeden says that according to the BOE, its main concern is a rapid flow of money from banks to stablecoins. “precipitous drop in credit for businesses and households” If the system could not keep pace and scale, it would be a problem.
She said that the focus is on ensuring there is enough time for the system to adjust gradually, and this is important. “critically important issue in the UK given credit here relies more heavily on banks compared to, for example, the position in the US.”
“Our starting point is that applying limits to a user’s holdings of a given systemic stablecoin is the best way to avoid such a precipitous reduction in the availability of credit to UK borrowers.”
The central bank is keen to continue as the only payment system for assets markets
Breeden, however, said she is of the opinion that the wholesale payment and settlement of asset markets should be the sole domain reserved for the central bank. “unnecessary interconnections in the financial system,” Stability risks are possible.
Related: UK moves to allow asset managers to use blockchain for fund tokenization
But she did point out that money backed by the central banks isn’t used to settle all transactions and said it wouldn’t in the future, either. She predicted there would likely be an important role in tokenized markets Stablecoins and tokenized deposit are both regulated.
“We can’t, though, do this alone. We need the industry — both incumbents and new entrants — to work with us to engage, to experiment, to develop the use cases, and to deploy this technology,” Breeden added.
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Source: cointelegraph.com
