Cryptocurrencies unlikely to last, says BoE governorwritten by Bella Palmer
Andrew Bailey said that crypto-currencies in their current state were not likely to be the final settling point, as businesses and regulators would look for digital currencies which are stable
Bitcoin and other existing crypto-currencies will not last as technology develops, Bank of England governor Andrew Bailey has warned.
Speaking on a panel about digital currencies at the World Economic Forum's online Davos Agenda, Bailey said that digital innovation in payments was 'here to stay'.
But he said that crypto-currencies in their current state were not likely to be the final settling point, as businesses, consumers and regulators would look for digital currencies which are stable, safe and well-designed before fully shifting away from traditional currencies like the pound and dollar.
Bailey said: Are crypto-currencies here to stay? Digital innovation in payments – yes. Have we landed on what I would call the design, governance and arrangements for a lasting digital currency? No, I don't think we're there yet.
The whole question of people having assurance that their payments will be made in something with stable value, ultimately links bank to what we call fiat currency, which has a link to the state, Bailey said.
The BoE, like the European Central Bank, is looking at the feasibility of issuing its own digital currency. This would allow people to make sterling electronic payments without involving banks, as is currently possible with banknotes, and would in theory help avoid the volatility that renders bitcoin impractical for commerce.
Bitcoin, the original crypto-currency, has been on a wild ride so far this year.
Its value hit all-time highs of more than $40,000 earlier this month, soaring more than 700 per cent since last March's recent low, but fell back below $30,000 and is now around $33,000.
The digital currency is controversial as it is not backed by any physical assets such as gold, and it is not controlled by a central bank.
Former Goldman Sachs chief executive Lloyd Blankfein also shared Bailey's concerns over the crypto-currency.
He said: If I were a regulator I would be hyperventilating over bitcoin.
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