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The governor of the English central bank, Andrew Bailey, pleads for stable corner regulation. As for crypto-currencies, especially Bitcoin, as the banker believes they are unsuitable for payments.
If the name rings a bell, there is a reason. In March, the future governor of the Bank of England warned against Bitcoin. According to Andrew Bailey, Bitcoin investors must be “prepared to lose all their money”.
“It’s not a currency, it’s not actually regulated. It is a very volatile product. If you look at what happened this year, I would caution people. We know relatively little about the price of Bitcoin. It’s also a strange product because the supply is fixed. If you want to invest in Bitcoin, be prepared to lose your money”
Andrew Bailey, March 2020.
The now central banker has not changed his mind since then. At an online conference organized by the Brookings Institute, he once again outlined his position on crypto-actives.
For Bailey, cryptocurrency is simply “unsuited to the world of payments. “And as far as Bitcoin is concerned, it simply has no connection with currency”, according to the Bank of England governor.
While this opinion is shared by a few skeptics, Bailey goes even further by arguing they shouldn’t even be financial assets at all. As Cointelegraph reports, Andrew Bailey also doubts their qualities as an investment opportunity.
The reason given: “their value is fluctuating, widely, without notice” he argues. However, not all crypto-assets are a source of mistrust for the banker, especially in the payments field.
The Bank of England boss recognizes some merits of the stablecoins, which, according to him, can offer certain “useful advantages”, in particular by helping to reduce friction in payments. These benefits, however, come with strings attached.
“If stablecoins are to be widely used as a means of payment, they must meet standards equivalent to those in place today for other forms of payment and the forms of money transferred through them,” Bailey said.
The governor of the central bank also advocates protections and guarantees for the holders of these assets. But according to him, this legal framework does not currently exist for some stable corners.
These assets should provide “a robust entitlement for coin holders, with support mechanisms and protections to ensure that they can be repaid at any time on a 1:1 basis in fiat money. ยป
This mistrust of cryptocurrency could come at a high cost to Great Britain who’s still in the midst of economic downturn following its exit from the EU. If anything, now should be a time when the UK realizes its currency destined to failure against strong competitors (dollar, euro, yen) and that a shift in how they think about money in general could be a hugely beneficial gambit.