The Governor of the Bank of England has discussed the problematic nature of digital currencies in response to questions by the Treasury Committee in Parliament.
In a parliamentary meeting with the Treasury Committee Governor Andrew Bailey called cryptocurrencies “dangerous” but admitted there was a “huge enthusiasm” surrounding them.
“I don’t want to be seen as a Luddite. I’m skeptical about crypto assets frankly because they are dangerous and there’s a huge enthusiasm.”
While the Governor accepted the benefits of financial innovation, he added that investors need to maintain vigilance about the underlying assets they create. The cautious comments reinforce the bank’s stance on cryptocurrency, having previously stated that people should only invest in cryptocurrency if they are prepared to lose their money. Earlier this month at a press conference Bailey stated that “crypto and currency are two words that don’t go together for me,” and that “They have no intrinsic value.”
It would seem that despite concerns over cryptocurrencies, the bank has not ruled out digital currency entirely. In a recent job listing post for BOE , it was revealed that the bank had an opening for a CBDC policy analyst. A week prior the government announced the creation of a CBDC task force in collaboration with the Bank of England as part of an exploration into a central bank digital currency (CBDC)
“Like many other central banks, the Bank of England is actively exploring whether it should develop and issue a Central Bank Digital Currency (CBDC). No decision has yet been taken on whether or not a CBDC is needed in the UK, but it is an important topic for the Bank to understand”
The Bank of England along with the UK government hope that the exploration into fintech will enable the ailing economy to bounce back. The Chancellor of the Exchequer Rishi Sunak announced the steps the UK will take in order to grow their financial sector:
“Our vision is for a more open, greener, and more technologically advanced financial services sector. The UK is already known for being at the forefront of innovation, but we need to go further. The steps I’ve outlined today, to boost growing fintechs, push the boundaries of digital finance and make our financial markets more efficient, will propel us forward.