Andrew Bailey stated that he doesn’t think that existing cryptocurrencies have the design or governance to stand the test of time.
Talking in a World Economic Forum panel on “Resetting Digital Currencies,” the Bank of England Governor Andrew Bailey stated that no existing digital currency has the design and governance to make a lasting impact on global finance.
When asked if digital currencies had turned a corner in recent years in terms of sentiment or utility, Bailey answered, “No, I don’t think we’re there yet. I don’t think cryptocurrencies as originally formulated are like that.” alternately, he said, there’s “the whole question of people having the assurance that their payments are going to be made in something with stable value, which as the history lesson says ultimately links back to what we call fiat currency.”
However, Bailey said that there is no room for innovation here; that is why it is important to continue discussing stablecoins, digital currencies made to hold their value to another currency, and central bank digital currencies government-issued assets.
Since March of last year, Andrew Bailey has led Britain’s central bank, after previously serving as Deputy Governor and then as Chief Executive of the UK’s securities regulator, the Financial Conduct Authority. Then, Bailey’s primary concern is with regulation, which he said was “about serving the public interest.”
Bailey emphasized three areas for a digital currency where there were regulatory issues that must be reconciled about the public interest:
- Ensuring the stability of value – which is essential not just for payments but also interoperability.
- Being able to tackle financial crime.
- Maintaining the privacy of personal information.
Bailey’s comments harmonized with those of Lloyd Blankfein, the former CEO of Goldman Sachs, who commented about Bitcoin today,
“If I were a regulator, I would be kind of hyperventilating at the success of it at the moment, and I’d be arming myself to deal with it.”
Like Bailey, Blankfein is doubtful of Bitcoin’s potential as a payment method, given its volatility and its use as a store of value.
“It’s a store of value that can move 10% in a day—that, if you lose a code, or lose a slip of paper, it’s lost forever,” Blankfein stated.
Simultaneously, until some core issues about digital assets are reconciled, Bailey is not hopping on the cryptocurrency bandwagon, no matter how far up the market caps edge.
“Don’t think the technology comes before the public interest,” he said. “It doesn’t.”
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