Stablecoins, CBDCs Don't Present Inherent Risk to Financial Stability: Bank of England Executive Says

Christina Segal-Knowles played down concerns that the traditional banking model would be undermined.

AccessTimeIconJun 10, 2021 at 1:34 p.m. UTC
Updated Sep 14, 2021 at 1:09 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Stablecoins and central bank digital currencies (CBDCs) don't pose an inherent risk to financial stability even if they displace bank deposits, a Bank of England (BoE) executive director said.

  • A shift to wider use of stablecoins and CBDCs "does not inherently constitute a financial stability risk as long as it happens in an orderly manner," Christina Segal-Knowles, executive director of financial market infrastructure at the BoE, said in a speech Thursday.
  • Segal-Knowles played down concerns that holding stablecoins and CBDCs would undermine the traditional banking model if consumers chose to use them rather than depositing their money into a commercial bank.
  • "In fact, findings show that the implications of this in the long term for the ability of households and businesses to get a loan are relatively modest," she said, although she acknowledged there is some uncertainty about that.
  • Stablecoins don't pose any new issues, Segal-Knowles said. They are similar in nature to traditional forms of private money that is deposited by consumers and businesses in commercial banks.
  • "This means that we will hold them to standards similar to those applicable to existing private money. It doesn't matter what type of technology you're using or the legal form of the firm."
  • The speech followed the release of a BoE discussion paper exploring stablecoins, which focused on the adoption of private money and difficulties that could be presented for monetary policy as well as the cost and availability of lending.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.