During a speech to the Brookings Institute yesterday, Andrew Bailey, Governor of the Bank of England, criticized Bitcoin as a poor payment method but praised Stablecoins and CBDC.
Not everything in the crypto market is so bad
In this way, the Bank of England is the latest to praise Stablecoins and Central Bank Digital Currencies (CBDC). However, he could not pass the occasion to criticize Bitcoin.
Bailey’s speech focused on how finance had been flooded with interesting innovations. However, that does not mean that everything is good. Bailey noted that while Blockchain technology may be impressive, innovation has not increased efficiency.
Specifically, the speech is born as the consequence of a reality: People do not want to have cash. In fact, cash withdrawals in the UK have dropped 60% since the quarantine began, driving up digital payments.
Therefore, faced with this reality, it seems that the governor of the Bank of England is beginning to think about alternatives to adapt to the new world dynamics. Will it be Bitcoin or a CBDC?
However, the governor of the Bank of England argued that cryptocurrencies like Bitcoin were not the answer they were looking for. But are Stablecoins and CBDC a viable option?
Specifically, the governor noted that the leading cryptocurrency “has no connection” to money. He also added that cryptocurrencies “may have extrinsic value” but are a “high-risk investment opportunity.”
Stablecoins and CBDC are options
Thus, unlike “fluctuating” currencies, “stablecoins could offerr useful benefits ”.
“For example, they could further reduce friction in payments, potentially increasing the speed and reducing the cost of payments (particularly if global stable currencies were established)«He added.
Likewise, the Governor believes that Stablecoins and CBDCs can coexist and work hand in hand.
In this way, Bailey considers that “If stablecoins are to be used widely as a means of payment, they must have standards equivalent to those that exist today for other forms of payment and the forms of money transferred through them.”
However, despite having indicated his interest in a CBDC digital currency, the governor did not actually offer too many details regarding whether or not the country had advanced in the development of said currency.
Bailey said that while CBDCs have a lot of potential, launching one would require “careful consideration.”
Consequently, it appears that a CBDC for the UK is being considered. However, at the moment no further information is available in this regard.