BoE’s Andrew Bailey Softens Stance on Stablecoins, Backs Payments Innovation With Safeguards

Bank of England governor Andrew Bailey has notably dialled back his earlier scepticism about the long‑term role of stablecoins in the UK, arguing it would be a mistake to reject the asset class “as a matter of principle.” In an article for the Financial Times, Bailey said stablecoins could spur “innovation in payments systems,” but stressed that any new form of private digital money must still confront the enduring questions of central banking if it is to safeguard confidence in money. Preserving public trust, he wrote, remains “critical” to the functioning of every modern economy.

What exactly are stablecoins?
Stablecoins are a subset of cryptocurrencies issued by private entities rather than by central banks such as the Bank of England (BoE) or the European Central Bank. Unlike a central bank digital currency, which would be a direct claim on the state, stablecoins are private instruments that aim to maintain a steady price. In the UK, cryptoasset activity is still only partially regulated, and the Financial Conduct Authority has repeatedly warned that most crypto trading is high risk and largely speculative. Among the most widely used stablecoins are Tether (USDT), USD Coin (USDC-USD), and Stasis Euro (EURS-USD), which together anchor a large share of crypto market liquidity.

How do stablecoins differ from other cryptocurrencies?
Traditional cryptocurrencies such as Bitcoin or Ethereum float freely and are not tied to any underlying asset; their prices can rise or fall dramatically based on market sentiment. Stablecoins, by contrast, are designed to hold their value close to a reference asset—typically a fiat currency like the US dollar or the British pound, or sometimes a commodity such as gold. The objective is price stability: in an ideal case, one coin would reliably redeem for one unit of the reference currency.

Issuers pursue that stability using a variety of mechanisms. Some maintain reserves of cash and highly liquid securities to back their coins one‑for‑one, offering redemption at par. Others rely on over‑collateralisation with crypto assets, or on algorithmic systems that expand and contract the supply in response to demand. While designs differ, the common goal is to make stablecoins function as a predictable medium of exchange within digital markets, rather than as volatile investments.

Why is the UK government paying attention?
The global stablecoin market is already worth around $200 billion (£148 billion), and it plays a growing role in international crypto trading and settlement. With London accounting for roughly 40% of global foreign exchange turnover, a formal UK framework for stablecoins could dovetail with the city’s strengths in payments, clearing and cross‑border finance, according to industry group Innovate Finance. Proponents argue that properly designed stablecoins can reduce the friction and cost of currency conversion, enabling faster, more predictable international payments and new forms of financial