Bitcoin (BTC) is “not taking off” and losing momentum as a payment method because of its inefficiency, Bank of England (BOE) Governor Andrew Bailey told the United Kingdom Parliament Treasury Committee on Jan. 10.
Bailey and BOE Deputy Governor Sarah Breeden appeared before the committee to discuss the BOE’s latest Financial Stability Report.
Bailey repeated his assertion that unbacked cryptocurrency has no intrinsic value. Furthermore, he said:
“My own sense is that it’s not taking off as what I might call a core financial service. […] For instance, using Bitcoin as a payments method is pretty inefficient.”
Breeden added that the lack of regulatory framework is hindering the progress of cryptocurrency in traditional finance, but the situation was changing.
Bailey continued that stablecoin presented challenges to regulators and was not stable enough. He called them “opaque.”
Related: UK plan on digital securities sandbox laid before Parliament
Central bank digital currency (CBDC) — or “Britcoin,” as they called it in the meeting — was also touched on briefly. Breeden said that debate continues on issues of privacy and programmability.
Bank of England Governor Andrew Bailey says the integration of cryptocurrencies into the global financial system has stalled https://t.co/WKwrz9ZZiE
— Bloomberg Markets (@markets) January 10, 2024
The December report, which was the focus of the meeting, devoted little space to digital currencies. Authorities are considering policy choices for stablecoins and CBDC, the report said, and:
“This has included how to mitigate financial stability risks arising from the potential for a greater proportion of deposits to be withdrawn from a banking system in a stress.”
In addition to that, it mainly reviewed previous findings and recommendations. “The FSB will conduct a review of the implementation of its recommendations by end-2025,” it said. Regulators in the UK have been working on stablecoin rules for much of 2023. Stablecoin regulations are expected to come into force in the U.K. in 2025.
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