Stablecoin growth could boost dollar dominance, US Treasury demand: BoE official

Bank of England Policy Maker on Digital Dollars

A Bank of England policy maker said digital dollars could expand access to the US currency while turning stablecoin issuers into bigger buyers of government debt.

Stablecoin Adoption and Dollar Dominance

Wilkins’ comments come as stablecoin adoption continues to grow, with more than $300 billion now in circulation. The market remains overwhelmingly tied to the US dollar, which accounts for 98% of stablecoin value and gives the currency what Wilkins described as a “considerable first-mover advantage.”

Related:

• BofA, Citi, Goldman Sachs among 21 institutions planning stablecoin launch

UK Regulatory Efforts for Pound-Denominated Stablecoins

By contrast, British pound-denominated stablecoins have been much slower to gain traction, although UK regulators have taken several steps this year to encourage their development. The Financial Conduct Authority began testing prospective stablecoin issuers through a dedicated regulatory sandbox and finalized rules for UK stablecoin issuance in June. The Bank of England has also been experimenting with digital money, including a recent test of whether stablecoins and a simulated digital pound could work together for cross-border trade payments.

Bank of England's Accommodating Approach

The shift comes as the Bank of England takes a more accommodating approach to stablecoins following industry criticism that its proposed rules could stifle innovation.

Related:

• Fragmented regulations limit stablecoin adoption in international finance: WTO head