Bank of England: Systemic stablecoins can hold “some” government bonds

PANews reported on September 4th, according to Ledger Insights, that Bank of England Deputy Governor Sarah Breeden addressed the topic of stablecoins in a speech. When the Bank of England outlined its stablecoin plans in 2023, the framework outlined was deemed unattractive to large or systemically important stablecoin issuers. The good news was that these issuers could hold reserves at the central bank, a move considered desirable by many. The bad news was that these reserves would not earn interest, undermining the current dominant business model. Breeden, who had previously hinted at relaxing this stance, clarified today that systemically important stablecoin issuers would be able to hold "a portion" of their backing assets in high-quality, liquid assets such as short-term government bonds.

She also noted that while the initial planning for stablecoins focused on retail use cases, this has changed. Both stablecoins and tokenized deposits will now be used for the settlement of tokenized securities as part of the UK Digital Securities Sandbox. This is a relatively recent development, as stablecoins were not originally covered by the sandbox.