The British Central Bank has updated the regulatory framework for systematic currency stabilization. Compared to the earlier version of the consultation, the new programme reduced the share of cash in the reserve, removed user holding limits and set a temporary issuance cap for a single product, the overall orientation being to find a balance between attracting distributors and controlling financial risk.
Lower cash reserve ratio
The previous scheme required the issuer to deposit 40 per cent of the reserves in the form of cash in the British Central Bank, and another 60 per cent of the reserves in short-term British Treasury debt. The latest rules reduce the cash ratio to 30 percent, with the remaining 70 percent of the United Kingdom Treasury bills up to six months.
This adjustment responds to industry concerns about operating costs and revenue space. The market had previously argued that an excessive share of interest-free cash reserves would reduce the profits of stable currency operations and weaken the United Kingdom ' s attractiveness to issuers. Sarah Breeden, Vice-President of the British Central Bank, stated that this was intended to bring more options and innovation to the UK’s payment market.
Elimination of holding limits
At the same time, the British Central Bank has abandoned the previously controversial holding restrictions. Earlier, it had been suggested that individuals held up to Pound2 million in stable coins and businesses had a ceiling of Pound10 million. Both limitations have been removed from the new framework.
Instead, the regulator will place a temporary cap of Pound40 billion on the movement of each systematic currency. According to the British Central Bank, this arrangement is intended to slow the rapid flow of bank deposits to stable currencies and to prevent the financial base of traditional banks from being weakened too quickly, thereby affecting their ability to lend to families and businesses.
24 hours to redeem.
The new framework also incorporates central bank liquidity support tools. Eligible issuers can apply to the British Central Bank for emergency liquidity support by obligating British Treasury bonds when under pressure in the market.
In the case of foreclosure claims, the systematic stabilization currency must be redeemed at face value within 24 hours, and can not be suspended even in times of financial pressure, and the threshold of foreclosure cannot be set. At the same time, the British Central Bank rejected the proposal to place reserves on commercial bank deposits or money market funds on the grounds that such assets could increase risk transfer between stable currencies and traditional banking systems.
Additional information:According to the data, the current total market value of the stable currency is approximately $31,745 million, which is below the previous high point of approximately $322 billion.