Bank of England Deputy Governor Breeden Says UK Stablecoin Reserve Ratio Will Be Reviewed
According to Sarah Breeden, the Bank of England is considering alternatives to proposed stablecoin holding caps as it seeks to limit deposit outflows from banks without constraining the framework unnecessarily.
Bank of England Deputy Governor Sarah Breeden said the central bank is open to alternatives to proposed stablecoin holding limits, telling the House of Lords Financial Services Regulation Committee on March 12 that the caps were designed to prevent bank deposits from moving into stablecoins and reducing credit available to businesses and households. Her remarks add to the Bank of England’s ongoing review of its stablecoin framework, which has already included reassessing proposed measures such as a £20,000 personal holding limit, technical challenges around tracking stablecoins bought on secondary markets, and whether a proposed 60:40 reserve ratio is too conservative. Final rules are expected by year-end.
- Stablecoin: A cryptocurrency designed to maintain a stable value, typically by being pegged to a fiat currency or backed by reserve assets.
- Reserve ratio: The proportion of backing assets held to support redemptions and help maintain confidence in a product such as a stablecoin.
- Secondary-market holdings: Assets purchased from other market participants after initial issuance, rather than obtained directly from the issuer.