Bank of England Governor Andrew Bailey declares cryptocurrencies as “extremely speculative investments” and emphasizes the need for enhanced digital money.
During his recent London Financial and Professional Services Dinner speech, Bank of England’s governor Andrew Bailey expressed skepticism towards cryptocurrencies.
He stated that bitcoin (BTC) and other cryptocurrencies do not meet the standards to be recognized as money, classifying them as “extremely speculative investments.”
Bailey emphasized the importance of singleness and finality of settlement, the two foundations he believes are essential for safe money. Singleness refers to the assurance that money holds the same value regardless of its form, ensuring equal exchangeability. The finality of settlement implies confidence that a payment has been effectively completed.
Bailey’s preference for what he called “enhanced” digital money became evident as he highlighted its potential to shape the future of finance.
He defined enhanced digital money as a form of currency based on internet systems capable of processing executable actions, such as smart contracts, going beyond the scope of central bank digital currencies (CBDCs). He further explained that a retail CBDC, in particular, could promote the singleness of money by providing the public with a fully functional central bank money option for everyday use.
Varied approaches to crypto adoption
While the Bank of England Governor expressed reservations about cryptocurrencies, some nations have adopted contrasting approaches.
El Salvador became the first sovereign state to establish bitcoin as a legal tender in September 2021. President Nayib Bukele’s administration introduced the Bitcoin Law, allowing citizens to transact and store wealth using BTC.
Similarly, plans are underway in Dubai to create a Bitcoin Tower Hotel to deepen crypto ties and foster adoption. This development will allow individuals to use cryptocurrency to get access to a broader range of services if the project turns out to be successful.
On the other hand, the Financial Conduct Authority (FCA) in Britain recently took a strict move against crypto ATM operators in the region.
The watchdog banned stopped 26 ATMs across different parts of the country that it claimed were offering cryptocurrency transactions illegally.
Residents were warned about the possibility of getting scammed if they used those machines. The FCA checked 34 cities suspected of having illegal crypto ATMs and managed to stop 26 operators. Steve Smart, the FCA’s joint executive director of enforcement and market oversight, highlighted the dangers of using unregulated crypto ATMs and advised the public to be wary of such platforms
Last month, the UK government introduced new guidelines to improve the cryptocurrency sector. This development comes as they acknowledge that cryptocurrencies are becoming more popular in the region and the need to address the potential risks involved.
