This baseline set of expectations will help avoid regulatory fragmentation and is an important and necessary step. But alone it is not sufficient. Existing standards must be examined and updated where necessary. There needs to be a clear G20 mandate for the various sectoral standard-setting bodies to consider their standards and whether they need to be refreshed or clarified in light of stablecoins. This is necessary to truly deliver on the principle of same risk - same regulation. The Committee on Payments and Market Infrastructure (CPMI) and International Organization of Securities Commissions (IOSCO) are working to ensure that it is clear to stablecoin developers how international standards of regulation and supervision for financial market infrastructures, including payment systems, (the Principles for Financial Market Infrastructures – PFMI) will apply to them, including where stablecoins are used in systemic payment systems. Other standards setters, such as the Financial Action Task Force (FATF) and the Basel Committee on Banking Supervision (BCBS), will need to respond as well. Coordination between regulators is essential too. In particular, host regulators of global stablecoins must, and are, working with other regulators in other jurisdictions to ensure that they are appropriately regulated and gaps in coverage, opportunities for regulatory arbitrage, do not emerge. The Bank looks forward to the conclusions of the FSB’s consultation, and the subsequent finalising of international work, to ensure a comprehensive framework can be in place. Current proposed global stablecoin offerings will need to demonstrate how they meet these key domestic and international standards.

What is not acceptable is to fall between regimes – for instance to argue that by holding backing assets such as sovereign bonds that are in general much safer than those on a bank’s balance sheet, this is good enough to ensure convertibility into fiat money at par. Low risk is not the same as no risk. This is why the FPC set out in its Financial Stability Report that stablecoins used in systemic payment chains should meet the standards equivalent to those expected of commercial bank money in relation to stability of value, robustness of legal claim and the ability to redeem at par in fiat. 5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  Some major stablecoin proposals do not appear at present to meet this expectation  Some stablecoin proposals do not include a legal claim for coin-holders. And some stablecoins propose backing in instruments that may have material market, credit and liquidity risk, but do not have the money protections I have outlined. While this might be acceptable for speculative investment purposes, it would not be for payments widely relied upon by households and businesses. Stablecoins need to offer coin-holders a robust claim, with supporting mechanisms and protections to ensure they can be redeemed at any time 1-to-1 into fiat currency. Some may ask if this would rule out a multi-currency stablecoin? Such a proposition is the wrong place to start – it raises questions around the value of the coin, and the underlying money it represents.