Bank of England Deputy Governor Sarah Breeden clarifies that the plan to restrict stablecoin holdings and transaction size is temporary to ensure financial system stability. Industry groups opposed the proposed limits, fearing they would stifle innovation. The BOE will launch a consultation seeking feedback on limit levels and implementation paths.

Breeden emphasizes the need for gradual adjustment to stablecoins to prevent a sudden drop in credit availability. The central bank aims to remain the sole settlement for asset markets to avoid unnecessary financial system interconnections and stability risks. Central bank-backed money may not be used for all settlements in the future.

The BOE is considering higher limits for businesses and exemptions for large companies in the sterling stablecoin regime. A carveout for companies in the digital sandbox is also under discussion. The central bank is concerned about rapid outflows to stablecoins leading to credit shortages for UK borrowers, given the reliance on banks for credit.

Read more at Cointelegraph: Stablecoin Limits in UK Set to Be Temporary Says BoE Deputy