Bank of England governor dismissed Bitcoin as a means of payment

Cryptocurrencies like Bitcoin don't quite convince Bailey, but he sees a lot of potential for stablecoins.

During a virtual conference hosted by the Brookings Institute, Andrew Bailey, Bank of England’s (BoE) governor, stressed that crypto assets are just “unsuited to the world of payments.”

In prepared remarks on the future of cryptocurrencies and stablecoins, Bailey qualified Bitcoin (BTC) as an asset that has “no connection at all to money.”

Also, he showed reluctant himself to believe crypto assets are a proper investment opportunity, because “their value can fluctuate quite, widely, unsurprisingly.”

Bailey provided such comments while talking about the picking up in the pace of innovation in payments. However, on the stablecoins, the governor commented that it could offer some “useful benefits,” such as reducing frictions in payments, but he warned:

If stablecoins are to be widely used as a means of payment, they must have equivalent standards to those that are in place today for other forms of payment types and the forms of money transferred through them.

The speech also highlighted that some stablecoins proposals don’t include a legal claim for crypto holders, as the governor believes stablecoins “need to offer coin-holders a robust claim, with supporting mechanisms and protections to ensure they can be redeemed at any time 1-to-1 into fiat currency.”

The governor added that the starting point for the discussion of a global stablecoin should be based on single currencies but he didn’t necessarily rule out that the idea of a multi-currency stablecoin. Bailey said:

A global stablecoin is a cross-border phenomenon. It can be operated in one jurisdiction, denominated in another’s currency, and used by consumers in a third. The regulatory response must match this. […] Global issues require a global response, particularly for multi-currency stablecoins intended for cross-border transactions.

In June, United Kingdom-based blockchain firm L3COS submitted a proposal to the Bank of England, or BoE, for a blockchain-based operating system to power a central bank-issued digital currency, or CBDC.

Also, in March, the BoE published an in-depth discussion paper devoted to CBDCs, which analyzed the rapidly changing payments landscape and the potential role for CBDCs to support the bank’s task of managing monetary and financial stability.