Stablecoins have been gaining more attention in the past few years as investments into crypto have been rising. Stablecoins are digital currencies pegged to the value of another asset such as a fiat currency, like the U.S. dollar, or a commodity, such as gold. They offer a way to prevent cryptocurrency from wild price swings that can occur in the crypto market. But due to the recent TerraUSD (UST) collapse, the public is increasingly aware of the need for assurance that the stablecoins will retain their value.

BoE Governor Andrew Bailey sees the need for regulation to ensure public confidence in the value of stablecoins. As he stated in his Wednesday speech at the Institute of International Finance, "For stablecoins to function as money they will need to have the characteristics of, and be regulated as, inside money", referring to money issued by private entities like commercial banks.

The Bank of England is taking steps to ensure financial stability, recently announcing plans for a regime to monitor stablecoins that can influence the broader financial system. Additionally, the U.K. government has been consulting on new rules for crypto and the new Financial Services and Markets Bill being debated in Parliament involves the regulation of stablecoins as payment.

But Bailey is not ruling out the possibility of a central bank digital currency. The Bank of England is exploring the distribution of a digital pound to "anchor the value of all forms of money, including new digital ones and to ensure the maximum opportunity for innovation in payments services."

Ultimately, Bailey encourages potential investors to investigate the stability of the coins before investing. As he warned, “Unbacked crypto... could be a bet, a highly speculative investment or a collectible, but note that it has no intrinsic value, so buyer be very aware.”

The increasing need for reliable, stable digital currencies has prompted the Bank of England to consider stronger regulation. As Andrew Bailey, Governor of the Bank of England, has noted, for stablecoins to be adopted as money they must have the assured value of money issued by private entities such as commercial banks. The Bank of England is already taking steps to ensure financial stability, recently announcing a regime to monitor stablecoins and consult on new rules for the crypto industry as part of the Financial Services and Markets Bill.

Additionally, the U.K. is exploring the possibility of making a digital pound that would "anchor the value of all forms of money, including new digital ones and to ensure the maximum opportunity for innovation in payments services." This could lead to the creation of a central bank digital currency, but they will have to weigh the benefits of increased efficiency versus the potential damage it could cause of uneven distribution of profits from financial services.

Finally, Andrew Bailey urges potential investors to thoroughly investigate the stability of the coins before investing as some may be highly speculative investments or collectibles. In order to ensure financial stability, he advises that buyers should be aware that unbacked crypto has no intrinsic value.

From the TerraUSD (UST) collapse, to greater investigations into the stability of stablecoins, to the exploration into a digital currency, the Bank of England is taking important steps to ensure that the public maintains confidence in stablecoins. Their regulation of stablecoins and exploration of a digital pound could be a step towards a more efficient, secure digital monetary system in the U.K. While potential investors should always be aware of the risks of investing in crypto, these regulations and explorations can help give them the assurance they need.



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