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Bank of England to lift stablecoin limits only once risks to financial stability subside

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The Bank of England (BoE) will maintain its proposed limits on stablecoin holdings until it is certain that the digital assets pose no risk to the broader financial system, Deputy Governor Sarah Breeden said on Wednesday.

In a speech, Breeden emphasized that the central bank’s cautious approach stems from concerns that large and sudden outflows of bank deposits into stablecoins could destabilize traditional lending. “Such outflows could lead to a precipitous drop in credit for businesses and households,” she warned, if banks are unable to replace lost deposits quickly through wholesale funding.

The BoE has previously suggested caps of between £10,000 and £20,000 ($12,800–$25,600) for individuals, with higher thresholds for businesses. The final levels will be detailed in a consultation paper next month, which will outline the UK’s future stablecoin regulatory framework.

Breeden said the caps would be lifted “once we see that the transition no longer threatens the provision of finance to the real economy.” Large corporations, however, may be exempt so they can hold higher amounts if necessary.

Under the UK’s proposed framework, the BoE would oversee systemic sterling-backed stablecoins — those expected to play a major role in payments — while the Financial Conduct Authority (FCA) would regulate smaller issuers. The BoE is also working with the Treasury on a resolution regime to ensure continuity of services if a stablecoin issuer fails.

Breeden rejected criticism that the UK is lagging in crypto regulation, noting that Britain aims to finalise its framework next year, aligning its timeline with the United States.

BIS Digital Currency Chief Cecilia Skingsley Steps Down Early for Swedish Government Role

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Cecilia Skingsley, the head of the Bank for International Settlements (BIS) Innovation Hub, is stepping down two years before the end of her five-year term to return to Sweden for a government appointment, the BIS announced.

Skingsley, a former deputy governor of Sweden’s Riksbank, will become County Governor of Stockholm County next month. She began her role at the BIS in September 2022, leading its work on central bank digital currencies (CBDCs) and other fintech innovations.

Departure Comes Amid BIS Strategic Shift

Her departure coincides with broader structural changes at the BIS, ahead of incoming General Manager Pablo Hernández de Cos, who takes over in July. Reports earlier this year indicated plans to scale back the Innovation Hub, which had grown rapidly since its 2019 launch, expanding to seven global financial centers including London, Singapore, and Hong Kong.

“Under Skingsley, the Innovation Hub made great strides toward fulfilling our strategic goal of helping central banks face the challenges of the future,” said Agustín Carstens, the BIS’s current chief.

CBDC Landscape in Flux

Skingsley’s exit also follows increasing geopolitical tension around CBDCs. Notably, the BIS abruptly withdrew last year from a high-profile CBDC pilot project with China and other Asian central banks, raising questions about internal policy shifts and global alignment.

CBDCs remain a strategic frontier for central banks, with dozens of jurisdictions exploring digital versions of national currencies amid competition from private stablecoins and global digital finance trends.

Interim Leadership and Succession Plans

  • The BIS said Deputy General Manager Andréa Maechler, formerly of the Swiss National Bank, will serve as interim head of the Innovation Hub.

  • A formal recruitment process for Skingsley’s successor will be announced “in due course.”

Skingsley’s early exit may influence how central banks recalibrate their digital currency strategies in the face of evolving regulatory, technological, and geopolitical pressures.