- The Governor of the Bank of England (BoE) Andrew Bailey has termed crypto as a highly speculative and risky investment.
- He made this statement at the Mansion House in London, following a similar comment he made in April at the Institute of International Finance.
- The Governor seems to be rooting for a form of regulated digital money, away from crypto and stablecoin.
The Governor of the Bank of England (BoE) Andrew Bailey has said that “unbacked crypto, of the Bitcoin sort”, has no intrinsic value, is highly volatile and should be treated as an extremely speculative investment. He made this statement in a recent speech at the Mansion House in London.
The Governor of BoE further stated that stablecoins such as Tether (USDT) and USD Coin (USDC) are settlement assets for transactions used in the crypto world, however, they are not robust and do not meet standards of safe money in the financial system as currently organized. They both fail basic tests of singleness and settlement finality, he further added.
He added that both unbacked crypto and stablecoins are not money.
This is not the first time the Governor of BoE has had concerns with cryptocurrency. In April of this year, at the Institute of International Finance, Mr Bailey criticised crypto saying it had no stability of value. He characterised Crypto as a bet, terming it a highly speculative investment or a collectable but without an intrinsic value.
“Crypto is a bet or a collectable”
In the same speech in April, Mr Bailey did not have kind words for digital currencies or stablecoins either, saying they do not have assured value. He noted that for stablecoins to function as money, they needed to have the characteristics of money and be regulated.
The Governor delved briefly into the history of digital money, stating that digital money in the form of commercial bank deposits and commercial bank reserves are not new, they have existed for decades. However, digital money is now undergoing transformation through the technology of delivery; becoming retail digital money.
Mr Bailey wants the bank to become more proactive in thinking about digital commercial bank money and not leave it to Central Bank Digital Currency (CBDC). He seemed to be rooting for a Central Bank Digital Currency (CBDC) because, in this new world, a digital currency will be needed to anchor the value of all forms of money including new digital ones in order to encourage innovation in payment services.
The Governor mentioned that “enhanced” digital money has a better shot at becoming the future of finance than crypto. His argument, some could propose is that crypto is decentralised and is not regulated by a centralised institution.
The Governor of BoE is advocating for a retail CBDC in order to promote the singleness of money and ensure that the public always has the option of going into fully functional central bank money that they can use in their everyday lives.
