Andrew Bailey, governor of the Bank of England, has called on financial regulators to stay ahead of new technologies such as stabilising currencies and crypto-assets to prevent problems such as monetary policy instability and money laundering,media reported. His warning was directed at technologies such as Facebook’s Libra. Speaking at the Brookings Institution on Thursday local time, Bailey said financial regulators needed to review and update existing regulations to take the stable currency into account.
He also said G20 countries needed to send clear mandates to standards bodies to update and clarify standards. “If stable currencies are to be widely used as a means of payment, they must have the same standards as other forms of payment today and through stable currency transfers,” he said. “
According to Bailey, any issuer of sterling-based stable currency would also need to be BASED in the UK. Such stable currencies should also meet the criteria applicable to banks, he added. For Libra, this can be a problem because it is based on a basket of currencies.
It is not hard to see from Bailey’s comments that Libra could be forced to remove sterling from its basket of currencies or open stores in the UK to meet any new rules. However, these ideas are still under discussion, and they could take months or years to achieve what Bailey says.