The Governor of the Bank of England, Andrew Bailey, delivered a speech on July 10 that eloquently transitioned from discussing the central bank’s efforts to combat inflation and uphold public confidence in financial institutions to expressing his skepticism regarding cryptocurrencies’ status as money. Bailey expressed a preference for “enhanced digital money” over cryptocurrencies and stablecoins.
He asserted that both cryptocurrencies and stablecoins fall short of meeting these fundamental criteria, although he refrained from providing further details.
“They are not money,” Bailey confidently declared, implying their inadequacy. However, he did note that the passage of the Financial Services and Markets Act would regulate stablecoins appropriately, aligning them with established standards.
Bailey then turned his attention to central bank digital currencies (CBDCs) as a form of enhanced digital money. He stated, “There is no reason that I can think of which makes well-designed enhanced digital money the sole preserve of central banks,” emphasizing that CBDCs offer distinct advantages.
By promoting the concept of enhanced digital money and highlighting the unique benefits of CBDCs, Governor Bailey appears to be laying the groundwork for future developments in the digital financial landscape.
While maintaining a cautious stance on cryptocurrencies and stablecoins, he recognizes the potential for innovation and competition beyond the realm of central banks. As the landscape evolves, the Bank of England aims to maintain stability and adapt to the changing demands of the modern financial ecosystem.