An official committee of the Bank of England tasked with monitoring the economy of the UK says it will continue to monitor developments in stablecoins and the financial risks associated with these assets. In a report of its April 4th and April 8th meetings, the Financial Policy Committee (FPC) identifies the risks posed by stablecoins as the market for these stable asset-pegged cryptocurrencies grew in size and activity over the past year. “Greater issuance of sterling offshore stablecoins with inappropriate backing assets, or backing assets on which the risk is poorly managed, could be vulnerable to greater risk of fire-sales of backing assets, with implications for core financial markets in the UK.” The body warns against the dominance of stablecoins backed by foreign currencies, even as the UK and other jurisdictions work on developing regulatory regimes for these assets. “Even with appropriate regulation, greater use of stablecoins denominated in foreign currencies could make some economies vulnerable to currency substitution and other macro financial implications.” The FPC says there are also potential implications for cross-border payments once stablecoin use goes beyond crypto settlements. “For retail flows, stablecoins could see greater household and SMEs use for cross-border payments, which may result in currency substitution. For wholesale flows, settlement outside of central bank money could increase counterparty credit risk and make it harder to moderate increased volatility in cross-border flows through central bank liquidity facilities.” Follow us on X , Facebook and Telegram Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inbox Check Price Action Surf The Daily Hodl Mix Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing. Generated Image: Midjourney The post Bank of England Officials Say Stablecoin Risks Present ‘Implications for Core Financial Markets in the UK’ appeared first on The Daily Hodl .
