Baroness Kramer (LD)

My Lords, here I am again with another issue that I want to raise. It does not necessarily look like it, but this is another constitutional amendment. Digital money and stablecoin are coming. As I have said in the House before, I am not King Cnut but I am concerned that both the industry and the regulators treat stablecoin as merely a change in plumbing in the payments system. I understand the desire for the UK to be an attractive place for stablecoin companies and the need to build a substantial sterling stablecoin sector. What concerns me is that, at scale, it has huge consequences for the taxpayer to carry the liabilities, and it determines who has their hands on the levers of economic power. I will not pursue that last issue; it would take about 10 minutes and the Committee is beyond coping with that. In October, the FCA will publish regulations for the non-systemic stablecoin players but, on Monday, the Bank of England launched its policy statement and draft rules for systemic stablecoin. The document is clearly a loosening of rules previously under discussion, but my attention was grabbed by the Bank’s confirmation that it will introduce a central bank liquidity facility for systemic stablecoin. In other words, if there is a run on stablecoin, the taxpayer is on the hook. It is true that liquidity facilities are offered to the banks but to extend this to stablecoin is a major decision. I am not saying that it is right or wrong, but a decision on this scale, with the liabilities that are consequent, is above the pay grade of the regulator. This should be a decision in which Parliament is fully engaged. I beg to move.