Andrew Bailey stands as the Governor for the Bank of England, and has given a speech on Thursday, the 3rd of September, to the Brookings Institution. Within this speech, the Bank of England’s head gave a clear warning regarding cryptocurrencies, such as Bitcoin.
General Warning Of BTC
He warned that the leading cryptocurrency has no connection with money, and added that the Bank of England is currently in talks regarding a Central Bank Digital Currency (CBDC).
Even with the warnings, it should be noted that Bailey’s speech was titled “Reinventing the Wheel (with more automation).” Thus, Bailey discussed automation in finance at large, which shows that the speech itself is supportive of new technologies within financial policies.
Highlighting Financial Innovation
The main idea behind the speech was that the finance space at large had been saturated with innovation. Bailey even admitted to the countless new, interesting ways to make payments within the finance space. Back in July of 2020, Bailey even floated the idea that the Bank of England was considering the development of its own digital currency, as well.
Even so, Bailey made it clear that innovation wasn’t enough, holding a very critical stance towards crypto. He stated that blockchain technology, in and of itself, is very much impressive, but the innovation itself had not actually led to efficiency, according to Bailey.
Going From Completely Against To Majorly Against BTC
He stated that regulation on payment should reflect the risks of financial stability, as opposed to being the technological or legal form of payment activities.
It should be noted that, as grim as this sounds, this is actually a big step towards pro-Bitcoin for the Bank of England governor. Back in March this year, he claimed that all Bitcoin holders should prepare to find themselves without any money.
BREAKING: The Bank of England governor-designate, Andrew Bailey, says those holding bitcoin should “be prepared to lose all of your money” and “bitcoin has not caught on much”
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— Blockfolio (@blockfolio) March 4, 2020
Bailey stands convinced that a central bank’s role is fiat money. Thus, monetary policy should control a currency that is, in turn, regulated by the applicable central bank. The theory stands that a government is capable of claiming fiat cash as its own, due to the fact that it can tax to back up the value of its currency.
Bailey highlighted the key issue with it, however, which is that cash in and of itself is going out of fashion. While digital payments were rising due to the COVID-19 pandemic, cash withdrawals within the UK saw a 60% drop since the quarantine started.