During a virtual conference organized by the Brookings Institute, Andrew Bailey The Governor of the Bank of England (BoE) stressed that cryptocurrency assets are simply “not suitable for the payment world”.
In prepared comments on the future of cryptocurrencies and stable coins Bailey called Bitcoin (BTC) an asset that “has no connection to money”.
In addition, he hesitated to believe that crypto assets were a suitable investment opportunity. because “its value can fluctuate quite, widely, unexpectedly.”
Bailey made such comments when discussing the recovery in the pace of payment innovation. However, regarding stablecoins, the governor stated that it could offer some “useful benefits”, such as reducing friction in payments, but warned:
“If stablecoins are to be used extensively as a means of payment, they must have standards that correspond to those that exist today for other forms of payment and the forms of money they transfer.”
The speech also highlighted that some stable coin proposals do not include legal rights for cryptocurrency holders The governor believes that stablecoins “should offer coin holders a solid claim, with support mechanisms and safeguards to ensure that they can be redeemed 1 for 1 in fiat currency at all times.”
The governor added that the starting point for discussing a global stable coin should be based on single currencies, but did not necessarily rule out the idea of a stable multi-currency coin. Bailey said:
“A global stablecoin is a cross-border phenomenon. It can operate in one jurisdiction, denominated in the currency of another, and used by consumers in a third. The regulatory response must match this. […] Global problems require a global response, especially with stable multi-currency coins destined for cross-border transactions. “
In June, UK-based blockchain company L3COS made a proposal to the Bank of England BoE for a blockchain-based operating system to power a digital currency (CBDC) issued by the central bank.
Also in March The BoE released an in-depth discussion paper on CBDCs, examining the rapidly evolving payments landscape and the potential role of CBDCs in supporting the bank’s role in managing monetary and financial stability.