BoE Governor: cryptocurrencies of today are destined to fail long term

Bank of England Governor Andrew Bailey thinks it is unlikely 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:

“Are crypto-currencies here to stay? Digital innovation in payments – yes. Have we landed on what I would call the design, governance and arrangements for a lasting digital currency? No, I don’t think we’re there yet […] I don’t think cryptocurrencies as originally formulated are it.

Bailey indicated the levels of transactional privacy afforded by crypto assets is a source of concern among regulators, asserting the establishment “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 extended his concerns regarding privacy to stablecoins, stating:

“The whole question of people having 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.”

However, not everyone at the BoE is alarmed by cryptocurrencies. In November, Andy Haldane, BoE chief economist and a sitting member of the Monetary Policy Committee, stated that crypto assets may 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 and more recently the Reserve Bank of India