- The governor of the Bank of England, Andrew Bailey recently gave a speech at the Brookings Institute virtual event on the 3rd of September.
- In the speech, the governor covered many interesting topics, including that of Cryptocurrency.
The governor of the Bank of England, Andrew Bailey recently gave a speech at the Brookings Institute virtual event on the 3rd of September. In the speech, the governor covered many interesting topics, including that of Cryptocurrency.
Bailey started off by saying that innovation is all around the world except when it comes to the productivity numbers and in specifically one area where innovation really is happening in full force, is a world of payments. This was the focus of his speech.
Bailey then went on to say that innovation is a good thing and as regulators, it is not in their interest to stop this kind of Technology. To add to this, he says that innovation can support the pursuit of public interest objectives such as greater network resilience and make such standards clear earlier which is a much-preferred attempt rather than looking back in the future.
This is when Bailey started to talk about digital currencies as he highlighted that this is the backdrop to innovation in payments and specifically mentioned crypto, saying that they developed a new form of money.
Although from the way he said it, it doesn’t look like Bailey is a big fan of crypto. He went on to say that such benefits come with a significant amount of risk and challenges for many authorities all over the world. He adds that the Bank of England’s financial policy committee has laid out plans to respond to the significant changes occurring all over the payments world saying that regulation should reflect the stability risk of financial investment rather than the legal or technology form of payment activities.
Over the past few years, innovation has started to put a strain on the framework in a number of ways according to Bailey. Specifically discussing on crypto assets, he says:
“I will start with crypto-assets, such as bitcoin, which have appeared in the last ten years or so. They have no connection at all to money. They may have extrinsic value – you may like to collect them for instance, and as such they are a highly risky investment opportunity. Their value can fluctuate quite wildly, unsurprisingly. They strike me as unsuited to the world of payments, where certainty of value matters.”