Bank of England (BOE) Governor Andrew Bailey informed the UK parliament’s finance committee on January 10 that Bitcoin as a payment method is not gaining traction and is losing momentum due to its inefficiency. Bailey, along with BOE deputy governor Sarah Breeden, attended the committee meeting to discuss the BOE's latest financial stability report.
Bailey reiterated his stance that cryptocurrencies without backing have no intrinsic value. He expressed his belief that Bitcoin has not evolved into a core financial service, citing its inefficiency as a payment method. Breeden concurred, noting that the absence of a regulatory framework has been a hindrance to the integration of cryptocurrencies into traditional finance, but she acknowledged that this situation is gradually changing.
Bailey also expressed concerns about stablecoins, stating that they pose challenges for regulators and lack stability. He referred to them as "opaque." The discussion briefly touched on central bank digital currency (CBDC), colloquially referred to as “Britcoin.” Breeden mentioned that debates surrounding issues of privacy and programmability persist.
While the focus of the conference was on the December financial stability report, there was limited dedicated discussion on digital currencies. The report highlighted that authorities are exploring policy options for stablecoins and CBDC, particularly considering how to mitigate financial stability risks arising from potential withdrawals of greater deposits from the banking system during stressful periods. The report also mentioned that the Financial Stability Board (FSB) plans to review the implementation of its recommendations by the end of 2025.
UK regulators have been actively developing stablecoin regulations throughout 2023, and these regulations are expected to take effect in the UK in 2025.
