Financial stability was a key factor in the Bank of England's decision to hold stablecoin payment systems to the same regulatory standards as existing payment chains.
Christina Segal-Knowles, executive director of BoE's Financial Market Infrastructure Directorate, justified the bank's Financial Policy Committee's December ruling in a Jan. 23 speech, saying that without oversight, Britain could be left with a destabilizing "Stablecoin-shaped hole in [its] payments regulation."
That's because stablecoins may seek to operate outside of the existing financial infrastructure - the one that card payments, online banking services and others inhabit.
"Stablecoins could mean that in future, when I tap my phone at a coffee shop, I may be able to pay with a token that provides a new payment method entirely - and which would not rely on either my bank or my credit and debit cards," Segal-Knowles said.
The transaction therefore carries none of the assurances regulators offer for existing payment chains.
"Poorly designed, operated or regulated payment chains pose risks not just to economic activity directly, but also indirectly via confidence in the financial system and the real economy."
"If you're used for payments you should be regulated to the same standard as other entities conducting payments activities," she said.
"Payment chains that use stablecoins should be regulated to standards equivalent to those applied to traditional payment chains. Firms in stablecoin-based systemic payment chains that are critical to their functioning should be regulated accordingly."
"Where stablecoins are used in systemic payment chains as money-like instruments they should meet standards equivalent to those expected of commercial bank money in relation to stability of value, robustness of legal claim and the ability to redeem at par in fiat."
Segal-Knowles said these payment innovations are welcome in Britain - as long as the regulators have their say.
Bank of England's Stablecoin Ruling Targets Financial Stability, Exec Says
Udgivet den Jan 27, 2020
by Coindesk | Udgivet den Coinage
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