The governor of the Bank of England, Andrew Bailey has said that it is unlikely that cryptocurrencies will last in their current form. He believes that the design, governance, and arrangements of the current cryptocurrencies are not sustainable over the long-term. At the same time, Bailey stressed that digital innovation in payments is here to stay.
Cryptocurrencies Cannot Work Long-Term: Bank of England Governor
Speaking on an online forum in a panel entitled Resetting Digital Currencies hosted by the Davos-based World Economic Forum, Bailey said that cryptocurrencies will not last as technology keeps evolving.
According to him, cryptocurrencies do not have the right structure to work as a long-term payment method. Although, he believes that there has been innovation in payments but it does not apply to cryptocurrencies, saying:
“Are cryptocurrencies 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.”
According to him, the problem lies with value and volatility. Bailey believes that people want their payments conducted over a stable medium, which cryptocurrencies lack.
Fiat Can Be Improved through Stablecoins and CBDCs
Bailey compared cryptos with the current fiat system saying the latter could be made more efficient through digital means. Bailey noted that this can be organized in several ways such as stablecoins and central bank digital currencies (CBDCs):
“We’re right still to debate stablecoin, we’re right to debate central bank digital currency. Those issues, I think, are very much up for grabs.”
Bailey also pointed out that the appropriate level of privacy for digital currencies was likely to be hotly debated. He also highlighted as a challenge in setting one up, saying:
“This is a big one that is coming on to the landscape, the whole question of a privacy standard for transactions made in any form of digital currency, and where the public interest lies.”