Bank of England Deputy Governor: The UK may need to provide a bank deposit-like guarantee mechanism for stablecoin deposits

According to Bloomberg, Bank of England Deputy Governor Dave Ramsden stated that the UK may need to provide a protection mechanism for stablecoin deposits similar to that of bank deposits.

Ramsden pointed out that the central bank is considering how to maintain public trust in currency in the event of a collapse of a systemically important stablecoin. He suggested that long-term trust in stablecoins may require the establishment of a plan similar to bank deposit insurance, ensuring that stablecoin holders have priority creditor status in bankruptcy proceedings under statutory liquidation arrangements. Ramsden's remarks indicate that the Bank of England may extend the current protections for bank deposits to widely used stablecoins. The Bank of England has raised the protection limit for the public's regular cash deposits from £85,000 to £120,000 to guard against bank failures. The Bank of England plans to implement stablecoin regulatory rules by the end of the year.