Bank of England Warns About Stability Risks from UK Stablecoins

The Bank of England is raising concerns about the potential risks posed by stablecoins to the UK economy. The Financial Policy Committee (FPC) has highlighted the rapid growth of stablecoin markets and the need for robust regulatory frameworks to mitigate financial risks. Their assessment reveals that inadequate support asset quality could expose these currencies to sudden risk, potentially impacting core financial systems in the UK. The FPC warns that increased use of foreign currency-backed stablecoins may heighten economies’ exposure to currency fluctuations and increase vulnerabilities to exchange rate swings.