Bank of England (BOE) Governor Andrew Bailey has expressed skepticism about Bitcoin's potential as a payment method, citing its inefficiency.
Bank of England (BOE) Governor Andrew Bailey has expressed skepticism about Bitcoin's potential as a payment method, citing its inefficiency. During a January 10 appearance before the United Kingdom Parliament Treasury Committee, Bailey reiterated his view that unbacked cryptocurrency has no intrinsic value. He added that Bitcoin's use as a payment method is "pretty inefficient."
BOE Deputy Governor Sarah Breeden echoed Bailey's concerns, stating that the lack of a regulatory framework for cryptocurrency is hindering its progress in traditional finance. However, she noted that the situation is changing. Bailey also raised concerns about stablecoins, calling them "opaque" and presenting challenges to regulators. He emphasized the need for stablecoins to be properly regulated.
The BOE's December Financial Stability Report indicated that authorities are considering policy choices for stablecoins and central bank digital currency (CBDC). The report also reviewed previous findings and recommendations, highlighting the need to mitigate financial stability risks arising from the potential for a greater proportion of deposits to be withdrawn from the banking system in a stress scenario.
Regulators in the UK have been working on stablecoin rules for much of 2023. Stablecoin regulations are expected to come into force in the UK in 2025. Bailey's comments reflect the cautious approach taken by many central banks towards Bitcoin and other cryptocurrencies. Central banks are concerned about the potential risks posed by cryptocurrencies to financial stability and are working to develop appropriate regulatory frameworks.
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