The Bank of England is finally warming up to stablecoins, and it’s not a drill. Andrew Bailey, the guy at the top of the UK’s central bank, now says the future of money might not run through commercial banks anymore. Writing in the Financial Times , Andrew said it would be “wrong to be against stablecoins as a matter of principle,” giving a clear nod to crypto’s growing role in payments. That’s not something you hear every day from a central banker whose job is to keep the old system alive. Stablecoins, according to Andrew, can push innovation forward, especially in payment systems, both inside the country and across borders. This is a big change from the same man who once treated crypto like a ticking time bomb. Now, he’s cracking open the door, signaling that these coins might play a real role in the economy, not just in the crypto casino. But there’s a catch: public trust has to come first. Bailey targets stablecoins used for real-world payments Andrew said he’s only interested in stablecoins that actually do something in the real economy. Not the ones you use to hop in and out of trading platforms or meme coins. He wants coins that are used at scale for everyday payments and settling financial stuff, not tokens just floating around for fun. Those don’t count as money in his book, and he made that crystal clear. For any stablecoin to be taken seriously, Andrew said the assets backing them must be risk-free. No debt, no shaky loans, no gambling with interest rates. He’s talking zero exposure to credit or exchange rate swings. If the value isn’t stable, it’s not a stablecoin. And that’s not even the whole story. He warned that even risk-free assets can’t stop cyber attacks. So, if these coins want trust, they’ll need their own kind of insurance system, just like bank deposits have. And if something goes wrong, their users should be treated like priority creditors in any blowup. That means no rug pulls, no back-of-the-line drama. The law should back them. He also called out the current way many stablecoins work. Their terms of exchange? All over the place. Some depend on sketchy crypto exchanges, with users left at the mercy of confusing fine print. Andrew said that has to change. People must know exactly how to cash in and out, and those terms should be the same for everyone, every time. BoE plans full stablecoin regime and questions lending model Andrew took it further. He said the UK needs to rethink how money and credit are tied together. Right now, banks hold deposits and use them to hand out loans. That system, known as fractional reserve banking, means your money doesn’t just sit there; it fuels lending across the economy. But if stablecoins start handling the money part, who’s going to handle the lending? He said it’s possible to separate money from credit. Let stablecoins focus on payments, and let non-banks step up on loans. That’s not how the system works today, but Andrew said it could happen. Still, he warned that this shouldn’t be rushed. The UK needs to study how this plays out, especially during economic ups and downs. That’s the only way to avoid crashing the system while trying to improve it. Andrew admitted the technology behind stablecoins is new, but the question isn’t. He said the Bank of England has always asked how to keep money and lending connected. Without that link, economies don’t run. To move forward, the Bank of England is putting together a consultation paper. It’ll drop in the coming months and will lay out the rules for any stablecoin that wants to operate at scale. That includes daily payments or settling tokenized financial markets. One major idea: giving big-name UK stablecoins access to BoE accounts. That would make them look and act more like money backed by the state. Andrew said this will be a critical part of building a new system, one that lets the UK use what stablecoins offer without tearing apart the whole structure. The balance? Stay innovative, stay secure. If you're reading this, you’re already ahead. Stay there with our newsletter .
