BoE to offer unique liquidity backstop for systemic GBP stablecoins

The policy, aimed at maintaining gilt-market stability, positions the UK on a very different path to the EU.

The Bank of England has confirmed that the UK will become the first major jurisdiction to offer a central bank liquidity facility to qualifying systemic stablecoin issuers, marking another significant divergence between Britain’s digital asset regime and approaches emerging elsewhere.

Speaking at the Stablecoins Unblocked conference in London on Wednesday, Emma Butterworth, who leads financial market infrastructure innovation at the Bank of England, said the UK framework was deliberately designed to combine traditional financial stability tools with a regulatory model familiar to international financial institutions operating in London.

“I think another area where we’ve gone further than any other jurisdiction is that we’ve said that we provide a liquidity facility,” Butterworth said. “For the 70 percent of short-dated government debt, we’ve said actually if stablecoin issuers in the event of stress can’t liquidate in the market, they can come to us and liquidate with us, which again is quite a unique feature of the UK regime. I don’t think any other regimes do that.”