The Bank of England has released the minutes from its Financial Policy Committee (FPC) meetings held on April 4 and 8, 2025. The meetings focused on developments in the markets for unbacked cryptoassets and stablecoins. This announcement was made via a press release on April 9, 2025.
According to the Financial Policy Committee, there has been notable growth in the markets for unbacked cryptoassets and stablecoins over the past year. Regulatory frameworks are being developed both in the United Kingdom and internationally. The Bank of England, along with the Financial Conduct Authority (FCA), is working on regulations for systemic and non-systemic stablecoins, emphasizing the importance of backing assets to support redemptions during periods of financial stress. The committee highlighted that offshore sterling stablecoins with inadequate or poorly managed backing could pose risks to UK financial markets through asset sales.
The committee also reported that increased use of stablecoins in retail and wholesale cross-border payments might lead to currency substitution and heightened counterparty credit risk. It noted that while systemic risks from unbacked cryptoassets have not yet materialized, their growing size and connections to the financial system warrant attention. Several jurisdictions are implementing regulations for these assets.
The FPC was established in 2011 as a response to the 2008 financial crisis, tasked with monitoring and addressing risks to the UK’s financial system. Unlike the Prudential Regulation Authority (PRA), which supervises individual firms, the FPC focuses on systemic stability. Meeting quarterly, it publishes summaries and biannual Financial Stability Reports. The FPC can issue binding directions to regulators like the PRA and FCA, including setting capital requirements and limiting risky lending practices. It also provides non-binding recommendations. The committee comprises leaders from the Bank of England, external experts, the FCA chief executive, and a non-voting member from HM Treasury.
The Bank of England itself was established in 1694 as the UK’s central bank, responsible for maintaining monetary and financial stability. Its roles include issuing secure banknotes, setting interest rates to control inflation, regulating key financial institutions, and supporting financial system resilience. Additionally, it operates core payment systems, conducts research, collects financial data, and engages in public education through various resources and outreach efforts.
