Bank of England develops real-time stablecoin monitoring system

In 2023, the BIS Innovation Hub in London and the BofE (Bank of England) embarked on Project Pyxtrial to explore how technology can help regulators monitor asset-backed stablecoins’ balance sheets, providing insight into whether the backing assets exceed their liabilities at all times.

The partners have now developed a prototype data analytics pipeline for data collection, storage, and analysis. This system enables more frequent, fully automated reporting, enhancing monitoring efficiency. Its modular design allows it to be repurposed for monitoring other asset-backed tokenised products.

More details about the project

Project Pyxtrial aims to equip regulators with near real-time data on stablecoins’ liabilities and backing assets, addressing concerns about their adequacy and potential impact on financial stability. A data analytics pipeline automates the collection, storage, and analysis of information from stablecoin issuers, enabling continuous monitoring and improved regulatory efficiency.

With more frequent and detailed insights into stablecoin reserves and liabilities, regulators better detect risks and ensure proper asset backing. The system's modular design allows it to be adapted for monitoring other asset-backed digital products. This initiative is crucial for closing regulatory gaps, maintaining financial stability, and ensuring that oversight frameworks evolve alongside the digital financial landscape.