Bank of England to Consider Restricting Use of Stable Currency for Payments

According to reports, Bank of England Vice President Jon Chunliffe stated in his speech at the annual Innovation Finance Global Summit that the Bank of England (BoE) will consider whether to restrict the use of stable currency for payments in the industry’s new rules. Cunliffe stated that the Bank of England and the Financial Conduct Authority plan to consult on new rules for stable currencies later this year. Cunliffe said: Although from a public policy perspective, we hope for competition and innovation in the payment field, we need to guard against rapid and disruptive changes that do not allow the financial system time to adjust, which may threaten financial stability. The new rules will seek to regulate stable currencies like commercial bank currencies, including requiring them to be legal tender, face value, and redeemable on demand. However, stable currencies will not be like commercial banks Obtain bankruptcy protection like bank deposits. The stable currency rules will follow the principles formulated by the Payment and Market Infrastructure Committee of the Bank for International Settlements and the International Organization of Securities Commissions last year

The Bank of England plans to limit the use of stable currency for payments in new encryption regulations

The Bank of England (BoE) has raised concerns about the use of stable currencies and is considering whether it should restrict its use as a payment method. According to a report, the BoE Vice President, Jon Cunliffe, stated in a speech at the annual Innovation Finance Global Summit that the BoE and the Financial Conduct Authority plan to consult on new rules for stable currencies later this year.

The Need for New Rules

Cunliffe explained that the BoE is aware of the need for competition and innovation in the payment field. However, he maintained that the financial system should be given time to adjust to changes, and rapid and disruptive changes that threaten financial stability should be avoided.

Stable Currency Regulations

The new stable currency rules will seek to regulate stable currencies like commercial bank currencies. The regulations will require them to be legal tender, face value, and redeemable on demand. However, while stable currencies will be like commercial bank currencies in many ways, they will not receive the same bankruptcy protection as bank deposits.

Principles of New Rules

The new rules will follow the principles formulated by the Payment and Market Infrastructure Committee of the Bank for International Settlements and the International Organization of Securities Commissions last year. These principles aim to promote and maintain the safety and efficiency of payment systems and payment system providers.

FAQs

What are stable currencies?

Stable currencies are digital currencies that are pegged to a stable asset like fiat currency or a commodity. They are designed to reduce the volatility associated with other cryptocurrencies like Bitcoin.

Why is the BoE planning to restrict the use of stable currencies?

The BoE is concerned that rapid and disruptive changes in the payment industry could threaten financial stability if not appropriately regulated. They want to ensure competition and innovation in the payment field but avoid sudden changes that could destabilize the financial system.

Will stable currencies receive bankruptcy protection like bank deposits?

No. Stable currencies will not receive the same bankruptcy protection as bank deposits. The new rules will require stable currencies to be redeemable on demand, legal tender and have a face value, similar to commercial bank currencies.

Conclusion

The Bank of England and the Financial Conduct Authority are planning on consulting on new rules for stable currencies to ensure the safety and efficiency of payment systems and payment system providers. This move will help to promote competition and innovation in the payment field while avoiding rapid and disruptive changes that could threaten financial stability.