Neither of these models is likely to fit within the regulatory regime for payment stablecoins, though they may fit within other regulatory regimes. In the first case, to be acceptable as a means of payment at systemic scale, stablecoins will be required to meet redemption at par  on demand which is inconsistent with an investment product. In the second case, the issue of liquid liabilities that can be used as money in return for illiquid debt obligations is the banking business model and issuers of tokenised money who wish to pursue credit creation will need to be regulated as banks. This brings me to the second area, the issuance by commercial banks of new forms of digital money to be used on new payment rails – in the form of ‘tokenised’ bank deposits. These might offer some or all of the functionality and efficiency claimed for stablecoins, allowing banks deposits to compete better with non-bank payment coins. Some banks in the UK and in other jurisdictions have been exploring and investing in the development of tokenised deposits as settlement assets on new forms of ledger (eg DLT). The majority of this effort appears to have centred on wholesale as opposed to retail financial transactions[16], though there are signs that attention is now being given to tokenisation of retail deposits[17]. In regulatory terms, the tokenisation of bank deposits is a much simpler proposition than nonbank stablecoins.
This commitment has been made, for example, in public statements from Governor Andrew Bailey here here and here and Sarah John, the Bank’s Chief Cashier, here  , from myself  . 5. The NPA is a multi-year project which will allow for real-time payments, be able to handle increasing payment volumes. It will include the rules and standards that make up various payment types, allowing the market to create new products and services as well as allowing for the development of new overlay services. 6. Open Banking’s joint regulatory oversight committee consists of the FCA, PSR, CMA and HM Treasury. 7. See for example early stage use-cases of DLT for supply chain finance reported in UCL’s Centre for Blockchain Technologies report ‘DLT in the Supply Chain  ’. 8. As set out in Money creation in the modern economy | Bank of England the majority of money in the modern economy is created by commercial banks making loans. 9. The umbrella term ‘stablecoin’ has been used to describe a range of instruments with quite different characteristics. In particular, they may be backed by a range of financial assets, commodities or unbacked cryptoassets (which in some cases are supported by algorithmic protocols). The robustness of those backing assets and the wider safeguards for guaranteeing stability of value vary significantly across the products labelled as stablecoins. 10. See for example the Libra White Paper and related Diem technical papers 11. As set out in the Regulatory Initiatives Grid  . . 12.