Bailey Warns US Will Challenge Global Stablecoin Standards

Bank of England Governor Andrew Bailey warned on Friday that international regulators will face a significant challenge from the United States in establishing global standards for stablecoins, which he views as a potential risk to financial stability.

Speaking at a Bank of England conference on financial imbalances, Bailey, who also chairs the Financial Stability Board, emphasized the need for shared international rules to enable stablecoins to function in cross-border payments. "If we want stablecoins to be part of the architecture of payments globally, they're only going to work if we have international standards," he said. "Frankly, that, I think, is going to be a coming wrestle with the administration."

The stablecoin market exceeds $317 billion in value, according to CoinGecko data, with the largest tokens pegged to the US dollar and backed primarily by US Treasury bills and cash equivalents. Bailey highlighted risks tied to convertibility, noting that some dollar-backed stablecoins cannot be directly redeemed for dollars without using a crypto exchange. In a financial crisis, he said, exchanges could become overwhelmed, prompting holders of these "hard-to-convert" tokens...