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Bank of England says that crypto is doomed

Photo of: Joseph Stone
by Joseph Stone
bank of england

The governor of the English central bank is not a supporter of the current cryptocurrencies. For Andrew Bailey, they are not made to last and the regulation should also better supervise the use of crypto.

This is no longer a surprise. The governor of the Bank of England (BoE) regularly displays his skepticism towards cryptocurrency. “I have to be honest, it’s hard to see Bitcoin as having what we tend to call intrinsic value,” said Andrew Bailey in late 2020.

On the occasion of the World Economic Forum, the banker felt that the current digital currencies were not in a position to have an impact on global finance. He was more generally sceptical about their future.

“Are cryptocurrencies here to stay? Digital innovation in payments, yes,” answers the BoE Governor. However, in terms of design and governance, no digital currency meets the specifications.

Andrew Bailey specifically questions the value of cryptocurrencies, in plain English, their volatility. And this characteristic is a brake on their usefulness and their adoption in the long term, he considers.

“The whole question is to know if individuals have the assurance that their payments will be made in something whose value is stable,” like a traditional fiat currency, stresses the central banker.

However, his reservations relate only to existing cryptocurrencies. Bailey does not in any way close the door to innovation in this sector, particularly with respect to stablecoins. But the BoE boss prefers state-controlled currencies.

He also advocates more regulation to control the development of the stablecoins. The intervention of the regulator must more specifically focus on three areas. It is a question of guaranteeing the stability of their value and the confidentiality of data, as well as fighting crime.

While Bailey focuses on privacy, the confidentiality of transactions offered by crypto assets is nevertheless a concern. He calls for the establishment of a “privacy standard for transactions”. Such a standard would thus be in the public interest, the banker says.