Crypto and Stablecoins Are Not Money, Says Bank of England Governor in Favor of ‘Enhanced Digital Money’

Last updated:
Author
Author
Sujha Sundararajan
About Author

Sujha has been recognised as 🟣 Women In Crypto 2024 🟣 by BeInCrypto for her leadership in crypto journalism.

Last updated:
Why Trust Cryptonews
Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews
Ad DisclosureWe believe in full transparency with our readers. Some of our content includes affiliate links, and we may earn a commission through these partnerships. Read more
Source: Adobe / dbrnjhrj

Andrew Bailey, Governor of the Bank of England (BoE), reiterated his stance against cryptocurrencies, during his recent speech at the Mansion House in London.

Bailey, who previously voiced concerns about the speculative nature of cryptocurrencies, said on Monday that Bitcoin has “no intrinsic value and it’s highly volatile.” He also noted that crypto assets such as Bitcoin (BTC) are “best treated as extremely speculative investments.”

Bailey further added that stablecoins such as Tether (USDT) and USD Coin (USDC) “are not robust.”

“[Stablecoins] do not meet the standards we expect of safe money in the financial system. In particular, both fail the basic tests of singleness and settlement finality. They are not money.”

However, Bailey believes that the prospect of “enhanced forms of digital money” looks more promising.

Enhanced digital is most conveniently defined as a unit of money to which there is the capability to attach a lot more executable actions, for instance, contingent actions in so-called smart contracts, which could be simple or quite complex, he explained.

Recent events like the failure of a number of banks in the US and in Switzerland, and its consequences have raised questions over the singleness of money, Bailey added.

The remarks come after Bailey stressed in April that stablecoins, which are digital currencies pegged to the value of other assets like fiat, “purport” to be money but “do not have an assured value.”

His position on cryptocurrencies has been consistent, warning investors about the volatility and regulatory risks associated with these assets.

The collapse of Terra’s algorithmic stablecoin TerraUSD (UST) last year wiped out billions of dollars from the crypto market and prompted central banks and financial regulators to question the ‘stability’ of stablecoins.

Bank of England’s Retail CBDC Move

Last month, the BoE and the Bank for International Settlements (BIS) completed a year-long study into retail central bank digital currency (CBDC) payments, dubbed “Project Rosalind.”

From the Bank of England’s point of view, our main motivation for a retail CBDC would be to promote the singleness of money by ensuring that the public always has the option of going into fully functional central bank money that can be used in their everyday lives.

Bailey made it clear that the bank’s work on retail CBDC does not alter its commitment to issuing physical cash. “Cash is here to stay,” he added.

Recently, Tom Mutton, the head of the BOE’s CBDC project said in an interview, that the central bank is still considering which technology would underpin its CBDC.

Baily further said that the bank is receiving proposals to create digital money – ‘digital pound,’ in the form of stablecoins, issued by banks or non-banks.

“We will shortly set out proposals for regulating systemic stablecoins, under powers contained in the Financial Services and Markets Act 2023.”

More Articles

Cryptonews Deals
Crypto Payments Firm MoonPay Acquires Helio for $175M
Tanzeel Akhtar
Tanzeel Akhtar
2025-01-13 16:26:43
Features
3 Altcoins That Could Outperform Bitcoin in 2025
Jeffrey Gogo
Jeffrey Gogo
2025-01-13 15:45:23
Crypto News in numbers
editors
Authors List + 66 More
2M+
Active Monthly Users Around the World
250+
Guides and Reviews Articles
8
Years on the Market
70
International Team Authors