Bank of England Governor Highlights Inefficiency of Cryptos as Payment Method
Andrew Bailey, the governor of the Bank of England, expressed his belief that cryptocurrencies like Bitcoin have failed to gain momentum as a mainstream payment system. According to Bailey, cryptos are “pretty inefficient” for making payments and have not been able to keep up with the necessary momentum.
During a hearing with the UK Parliament’s Treasury Committee, Bailey emphasized that Bitcoin has not become a core financial service due to its inefficiencies as a payment method. He called for regulators to closely monitor the crypto sector and compared its current lack of growth with its previous momentum.
Deputy Governor Highlights Lack of Clear Regulation
Sarah Breeden, the deputy governor for financial stability at the Bank of England, also spoke during the hearing and highlighted the lack of clear regulation in the crypto space. She noted that this has hindered traditional finance from adopting cryptocurrencies.
However, Breeden mentioned that this trend is changing and that the absence of regulation has allowed mainstream finance to engage with crypto in a safe manner. She also discussed the increasing involvement of regulators in the crypto industry and referenced the recent approval of a Bitcoin exchange-traded fund by the US Securities and Exchange Commission (SEC).
Risks of Stablecoins and Consideration of CBDC
Both Bailey and Breeden emphasized the potential risks associated with stablecoins. Bailey stated that stablecoins remain “opaque” in terms of their operations. The officials also briefly discussed the possibility of introducing a central bank digital currency (CBDC) for the UK, known as ‘Britcoin,’ but acknowledged that privacy concerns still need to be addressed.
The discussions took place following the UK government’s plans to regulate fiat-backed stablecoins under the oversight of the Bank of England, the Financial Conduct Authority (FCA), and the Payment Systems Regulator (PSR).
Hot Take: Bitcoin Faces Challenges as a Mainstream Payment Method
Andrew Bailey, the governor of the Bank of England, has expressed his view that Bitcoin and other cryptocurrencies have not been successful in gaining traction as mainstream payment methods. Bailey cited inefficiencies in crypto transactions as a key reason for their lack of adoption. He called for regulators to closely monitor the crypto sector and stressed that un-backed crypto assets have no intrinsic value.
The deputy governor for financial stability at the Bank of England, Sarah Breeden, also highlighted the lack of clear regulation in the crypto space. However, she noted that this is changing and that mainstream finance can now engage with crypto in a safe manner. Both officials discussed the risks associated with stablecoins and briefly touched on the potential introduction of a central bank digital currency for the UK.
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