The Bank of England (BoE) Governor believes cryptocurrencies in their original forms are not the ideal form of digital currencies
The Bank of England (BoE) Governor Andrew Bailey believes that no cryptocurrency currently has the structure that would allow it to last over the long term. Bailey made this statement yesterday while speaking at the online discussion hosted by the Davos-based World Economic Forum.
In his remarks, Bailey said cryptocurrencies in their current form are not ideal digital currencies. Bailey asked whether we currently have the design, governance and arrangements that can be regarded as a lasting digital currency. “No, I don’t think we’re there yet, honestly. I don’t think cryptocurrencies as originally formulated are it“, he answered.
Bailey believes the biggest issue with cryptocurrencies remains their unstable value. “The whole question of people having the assurance that their payments will be made in something with stable value“, he added.
The lack of stable value for the leading cryptocurrencies makes it hard for them to become the ideal currencies. Volatility has always been an issue for cryptocurrencies like Bitcoin (BTC), and the rest are becoming an asset class rather than a medium of exchange.
Bailey stressed that people want their payments to be conducted over a stable means, which is where Bitcoin is lacking. Due to Bitcoin and other cryptocurrencies’ shortcomings, Bailey insists fiat innovation should come in and provide stability in the value of digital currencies.
He suggested that fiat systems should be made more efficient via digital means. The BoE Governor stated that it is right that the financial world is debating stablecoins and central bank digital currencies (CBDCs) as they are the solutions to the emerging market of digital currencies.
Bailey pointed out that digital innovation in payments is here to stay. With time, the world would find the proper design and governance model for lasting digital currencies. The rise of cryptocurrencies and stablecoins has paved the way for central banks to start talking about CBDC development and issuance.
Several central banks worldwide are either developing their CBDCs or exploring the possibilities of developing one. China remains one of the leading nations in terms of central bank digital currency development. The Digital Yuan is already being tested in various capacities in the country as China looks to lead the digital payment sector.