The U.K. central bank governor believes existing cryptocurrencies will fail over the longer term due to their robust privacy features. The BoE governor believes that the current generation of crypto assets lack the design and structure needed to ensure long term regulatory survival. Speaking during the World Economic Forum’s Jan. 25 online panel “Resetting Digital Currencies,” Bailey responded to a question on whether cryptocurrencies are here to stay for the long term with skepticism.
Transactional privacy provided by crypto assets is still a concern for regulators.
BoE governor indicated the levels of transactional privacy afforded by crypto assets is a source of concern among regulators, asserting the establishment of “a privacy standard for transactions” is in the public interest. “The whole question of a privacy standard for transactions made in any form of digital currency, and where the public interest lies […] this is a big one that is coming on to the landscape,” he said. Bailey also opined on stablecoins, “The whole question of people having the assurance that their payments will be made in something with stable value […] ultimately links back to what we call fiat currency, which has a link to the state.”
Central banks continue to research CBDCs.
Not everyone at the BoE is worried about cryptocurrencies. Earlier, Andy Haldane, BoE chief economist and a sitting member of the Monetary Policy Committee, stated that crypto-assets might be a key component of a ‘new monetary order. The Bank of England is among many central banks researching the development of its own fiat-backed digital currency, alongside the European Central Bank, Reserve Bank of India, and many others. The People’s Bank of China has been piloting its digital yuan for some time now and is now very close to issuing to the general public.