Bank of England Governor Expresses Doubts on Bitcoin Efficiency to UK Parliament

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During a recent meeting of the U.K. Parliament Treasury Committee, the topic of digital currencies was brought to the forefront, but the tone was far from enthusiastic. Bank of England (BOE) Governor Andrew Bailey expressed skepticism about the efficiency and practicality of Bitcoin as a payment method.

Bailey, along with BOE Deputy Governor Sarah Breeden, appeared before the committee to discuss the BOE’s latest Financial Stability Report. During the meeting, Bailey reiterated his view that unbacked cryptocurrencies, like Bitcoin, hold no intrinsic value. He emphasized the inefficiency of using Bitcoin for payments, stating, “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.”

Challenges in Regulating Bitcoin and Cryptocurrencies

Breeden added that the lack of a regulatory framework is a significant barrier to the integration of cryptocurrency into traditional finance. However, she noted that this situation is gradually changing.

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 discussion also touched upon the challenges posed by stablecoins. Bailey described them as “opaque” and not stable enough, highlighting the regulatory difficulties they present.

The meeting briefly mentioned Central Bank Digital Currency (CBDC), or “Britcoin,” as it was referred to. Breeden pointed out that there is ongoing debate over issues related to privacy and programmability in the context of CBDCs.

Financial Stability Report’s Take on Digital Currencies

The December Financial Stability Report, which was the focus of the meeting, devoted minimal attention to digital currencies. It mentioned that authorities are considering policy options for stablecoins and CBDCs, particularly concerning the mitigation of financial stability risks that could arise from a significant portion of deposits being withdrawn from the banking system during a stress scenario.

The report also reviewed previous findings and recommendations, noting that the Financial Stability Board (FSB) will conduct a review of the implementation of its recommendations by the end of 2025. UK regulators have been actively working on stablecoin regulations throughout 2023, with expectations that these regulations will be enforced in the UK by 2025.

The Bank of England’s cautious stance on cryptocurrencies, particularly Bitcoin, reflects a broader skepticism among global financial institutions regarding the integration of these digital assets into the traditional financial system.

Author

Steven Walgenbach

Steven's passion for cryptocurrency and blockchain technology began in 2014, inspiring him to immerse himself in the field. He notably secured a top 5 world ranking in robotics. While he initially pursued a computer science degree at the University of Texas at Arlington, he chose to pause his studies after two semesters to take a more hands-on approach in advancing cryptocurrency technology. During this period, he actively worked on multiple patents related to cryptocurrency and blockchain. Additionally, Steven has explored various areas of the financial sector, including banking and financial markets, developing prototypes such as fully autonomous trading bots and intuitive interfaces that streamline blockchain integration, among other innovations.

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