Bank of England Governor Andrew Bailey said Bitcoin and other cryptocurrencies don’t meet standards to be recognized as money and are best classified as “extremely speculative investments.” A better form of future money would be what Bailey called enhanced digital money during his speech at the Financial and Professional Services Dinner in London on Monday.
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Fast facts
- Bailey said cryptocurrencies and stablecoins fail to meet what he believes are the two foundations of safe money — singleness and finality of settlement.
- He explained singleness as: “wherever we hold our money – in bank accounts, notes and coins etc – we can be assured that it all has the same value – the pound in my bank account equals the pound in your account. In other words, money is exchangeable at par value,” said Bailey.
- “The second foundation – finality of settlement – means that when we pay for something we can rest assured that it actually has been paid for.”
- Bailey said what he called “enhanced” digital money has a better shot at becoming the future of finance than crypto. He defined such enhanced money as based on internet systems capable of processing executable actions, such as smart contracts, and not only confined to central bank digital currencies (CBDCs).
- “Our main motivation for a retail CBDC would be to promote the singleness of money by ensuring that the public always has the option of going into fully functional central bank money that can be used in their everyday lives,” said Bailey.
- The Bank of England governor’s comments are in line with his previous statements and warnings to the public. He said in June that investors in cryptocurrencies should be prepared to lose all their money.
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