Financial Services and Markets Bill [HL]

Debate between Baroness Noakes and Baroness Kramer

Committee stage
Wednesday 24th June 2026 Grand Committee

[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.

[Baroness Noakes (Con)]

My Lords, the Financial Services Regulation Committee has also been looking at stablecoin, so I have a few words to say on the topic.

I go back to my earlier point: this is not a regulatory principle that can be applied by the FCA and the PRA. It has very little to do with them, as it is the financial stability part of the Bank of England that has issued the policy. The backstop is just one part of the arrangements, as the noble Baroness, Lady Kramer, will be aware. A very significant part of the assets of stablecoin issuers also need to be held in unremunerated form at the Bank of England—30%, which is a significant amount of money. If the noble Baroness is worried about the cost to the taxpayer, she might also reflect on the gain to the taxpayer for all the time that there is not a crisis because the Bank of England has access to free money, which is part of the whole deal.

The stablecoin package needs to be looked at as a whole, rather than one small part of it being picked out. The noble Baroness may still disagree with it, but it is a calibrated package which balances the risks, including keeping one-to-one asset backing, which will also go a long way to allaying her concerns.

Financial Services and Markets Bill [HL]

Debate between Baroness Noakes and Baroness Kramer

Committee stage
Monday 22nd June 2026 Grand Committee

[Baroness Kramer (LD)]

Then I cannot see how they can be narrowed.

[Baroness Noakes (Con)]

My Lords, the Minister said that they may need the power to change financial services legislation. Since financial services legislation is in the hands of the Treasury, I think we are entitled to a slightly more specific explanation of how the power might be used to change primary legislation. Can he be more specific about which bits of financial services legislation the Treasury will likely use the power for?

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Debate between Baroness Noakes and Baroness Kramer

Committee stage
Wednesday 29th January 2025 Grand Committee

[Baroness Kramer (LD)]

My Lords, I shall speak briefly. If I had spotted the amendment of the right reverend Prelate the Bishop of Southwark in time, I would have signed it because it makes absolute sense. There is a pressure created, when one knows that a review is coming afterwards, to think through actions now. All in this Committee recognise that this Bill deals with the weakest of the weak. As there are two Bills, this one and one in the other place, either of which could be used to manage a remedy, I should have thought the Government might have been able to see a way through this.

I wanted to mention a procedural thing, just as a comment on the statement made by the right reverend Prelate the Bishop of Southwark. I hope that he realises that if he does not withdraw his amendment at this stage, he will not be able to bring it back on Report. Some people are not clear on that element of the procedure, so I mention it simply in case it guides what he might wish to do.

[Baroness Noakes (Con)]

His amendment is Amendment 67, so he is not going to be moving it until day four.

[Baroness Kramer (LD)]

He said, “I beg to move”.

[Baroness Noakes (Con)]

He cannot move it.

[Baroness Kramer (LD)]

Problem solved; I am back in my place. Those are the only comments that I wanted to make.

Bank Resolution (Recapitalisation) Bill [HL]

Debate between Baroness Noakes and Baroness Kramer

Report stage
Monday 4th November 2024 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I added my name to the amendment but I am glad that the noble Lord, Lord Vaux, will not be pressing it because, as he explained, there are difficulties with it.

I pay tribute to the noble Lord for chasing this issue down because it is a very real issue that could arise in certain defined circumstances, as he explained. I am not convinced that the solution of simply transferring assets into the bridge bank actually works. The complexities of a bank mean that you have liabilities—that is how you fund yourself from market sources—and in practice it may well be difficult. I hope the Government will take this away and find a way of minimising the likelihood that that ever happens, whether in the code of practice or otherwise, in discussion with the Bank of England.

[Baroness Kramer (LD)]

My Lords, the point that the noble Lord, Lord Vaux, has been making is significant and crucial in shaping the way in which the Bank of England approaches the resolution of banks when they fail.

Unlike the noble Baroness, Lady Noakes, I think there is a potential path of looking at the sale of the assets rather than the sale of the equity. That is the normal practice that one would follow in order not to transfer liabilities over to the new recovering entity. I fully understand all the complexities, and I hope the Minister will take this up with the Bank of England in his discussions. It requires a lot more work but it could get us out of some very nasty traps in future, and it will be more likely to do so if there has been thought beforehand rather than it being a reaction in a situation of emergency.