The Governor of the Bank of England warns banks not to issue stablecoins: tokenization of deposits takes precedence, think twice before buying Bitcoin.

Faced with stablecoins becoming the focus of global financial regulators, the UK has chosen a cautious approach, emphasizing financial sovereignty; the US, on the other hand, embraces innovation to expand the global influence of the dollar. This policy range-bound battle surrounding the trend of currency digitization simultaneously impacts the future direction of monetary sovereignty, regulatory frameworks, and financial order.

Bank of England sounds the alarm: Opposes stablecoins, CBDC, and Bitcoin

Andrew Bailey, the Governor of the Bank of England, recently expressed his condemnation of the threat that crypto assets pose to financial stability in an interview with the UK Times. He publicly warned: "If private banks are allowed to issue stablecoins, it will pose a systemic risk to the financial system."

Digital assets may weaken the government's control over monetary policy, thereby threatening national sovereignty. Instead, I suggest that traditional banks explore "deposit tokenization" and think about how to digitize our currency for payment purposes, as this is a safer alternative.

Moreover, he argued that the UK should maintain a prudent attitude towards this, not only expressing opposition to the promotion of central bank digital currency (CBDC), but also warning investors not to buy Bitcoin: "It is not money, nor does it have the functions of money. If you want to buy it, please keep your eyes wide open and see clearly."

As the new Chairman of the Financial Stability Board (FSB), Bailey's position is likely to influence global regulatory trends for stablecoins, limiting Europe's potential tolerance for stablecoins in the future.

(BIS criticizes stablecoins as "not in line with monetary principles," citing three major risks that could endanger the financial system's stability)

The U.S. government is making every effort to advance: stablecoins make the dollar hegemony great again.

In stark contrast to the conservative attitude of the UK, the Trump administration in the United States viewed stablecoins as a policy tool to expand the influence of the dollar. U.S. Treasury Secretary Scott Bessent previously stated, "Stablecoins not only help to extend the dollar's status as the global reserve currency but also allow U.S. debt assets to reach global markets, alleviating inflationary pressures."

(Analyzing the Wall Street hot topic of the "Pennsylvania Plan": Can stablecoins transform US Treasuries and restore the glory of the dollar?)

In addition, Federal Reserve Chairman Jerome Powell has also publicly expressed support for establishing a clear regulatory framework for stablecoins, paving the way for this trend.

By issuing stablecoins backed by reserves such as U.S. Treasury securities or cash equivalents, including the two existing giants USDT and USDC, the government can "put on-chain" U.S. financial assets, attracting global users with mobile phones and crypto wallets to participate in the dollar system.

( The bank is not interested! South Korea's central bank CBDC test called off, policy shift sparks a wave of stablecoin issuance )

Concerns and Innovations of European Stablecoins: Worries that Dollar Stablecoins Will Replace the Euro

In response to the United States' push for stablecoins, European countries have differing attitudes towards this. The Italian Minister of Finance warned that the dollar stablecoin could replace the euro's position in cross-border payments and reserve assets. On the other hand, the three banking giants in France, including Crédit Agricole ( Société Générale ), are actively issuing their own dollar stablecoin on Ethereum to enhance settlement efficiency for institutional users.

Similar concerns have also fermented within the crypto community, with crypto researcher Ignas pointing out the risks to the crypto market posed by the dominance of the US dollar stablecoin, calling for the establishment of more non-dollar options.

Although stablecoins can enhance the digital accessibility and geographical scalability of fiat currencies, such convenience is accompanied by risks for countries. The cautious attitude led by England reflects the core contradiction faced by sovereign nations when confronted with decentralized financial tools: on one hand, there is a fear of falling behind, while on the other hand, there is a greater concern about losing control over their currency.

This article warns that the Governor of the Bank of England advises banks not to issue stablecoins: tokenized deposits take priority, and think twice before buying Bitcoin. First appeared in Chain News ABMedia.