<ul><li>Activities around stablecoins are increasing, posing potential threats to financial stability if poorly backed or managed.</li><li>Offshore stablecoins tied to the British pound raise concerns about mismanagement and sudden redemptions causing shockwaves in UK financial markets.</li><li>The use of stablecoins tied to foreign currencies could result in unintended consequences, including partial currency substitution and pressure on macroeconomic policy tools.</li><li>Stablecoins could play a larger role in cross-border payments, offering cheaper and faster alternatives, but increasing credit risks and weakening central bank liquidity management.</li></ul>

Bank of England Flags Growing Stablecoin Risks in UK Financial System

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