Governor Andrew Bailey of the Bank of England has once again made headlines with his remarks, this time during an address at the Mansion House in London, drawing attention to the controversial topics of cryptocurrencies and stablecoins.
Echoing his previous sentiments, Bailey reiterated his skepticism towards digital currencies, punctuating the speculative essence of platforms like Bitcoin, which, according to him, lack in intrinsic value and are turmoil magnets due to their volatile nature. His repeated emphasis on crypto as being more akin to speculative investments than currency strengthens his ongoing viewpoint.
Diving deeper into the crypto-verse, Bailey brought the topic of stablecoins to the limelight. His critique of Tether and USD Coin as failing to live up to the expectations of secure money in the financial ecosystem added fuel to the fire. Speaking towards their failure in basic evaluations of singleness and settlement finality, Bailey unabashedly declared them as non-money.
Despite an apparent distrust towards current cryptocurrency formats, Bailey does see potential in the advent of “enhanced forms of digital money,” largely due to its harnessing power of smart tech capable of attaching string of executable actions.
On the flip side, there are concerns that this potential is compromised: the collapse of TerraUSD, an algorithmic stablecoin, exemplifies the uncertainties surrounding the ‘stability’ of stablecoins, as it erased billions from the crypto market. Lessons from banking mishaps in the US and Switzerland similarly cast doubts over the singleness of money, adding another layer of complexity to the matter.
However, Bailey highlights the recent advancement made by the BoE and the Bank for International Settlements. Completing a year-long investigation into the workings of retail central bank digital currency (CBDC) payments, the institutions have expanded their understanding of feasible implementations.
Committed to preserving the tangibility of physical cash, the Bank of England is exploring options for modernization through integration of retail CBDC tailored to promote the singleness of money.
Meanwhile, the BOE is examining suitable technologies for the infrastructure of its retail CBDC. In the midst of proposals flooding, the bank is deciding the next course of action, primarily focusing on the creation of a ‘digital pound,’ issued by banks or non-banks under the Financial Services and Markets Act 2023’s jurisdiction.
No doubt, Bailey’s comments have ignited renewed conversations in the crypto sphere, underlining the theme: balancing the newfound frontier of digital money with traditional financial stability.
Source: Cryptonews
