During a speech yesterday at the Brookings Institute, Andrew Bailey, governor of the Bank of England, criticized Bitcoin as a poor method of payment but praised the Stablecoins and CBDC.
Not everything in the crypto market is so bad
In this way, the Bank of England is the latest to praise the Stablecoins and the Central Bank’s digital coins (CBDC). However, he couldn’t pass up the opportunity to criticize Bitcoin.
Bailey’s speech focused on how finance had been flooded with interesting innovations. That doesn’t mean it’s all good, however. Bailey noted that while Blockchain technology may be impressive, the innovation has not increased efficiency.
Specifically, the speech was born as a consequence to a reality: People do not want to have cash. In fact, cash withdrawals in the UK have dropped by 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 of alternatives to adapt to the new global dynamics. Will it be Bitcoin or a CBDC?
However, the Bank of England’s governor argued that crypto-currencies 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 crypto currency „has no connection“ to money. He added that the crypto currencies „may have extrinsic value“ but are a „high-risk investment opportunity.
Stablecoins: a refuge from the volatility of cryptomoney
Stablecoins and CBDC are options
So, unlike „floating“ currencies, „stablecoins“ could offer useful benefits.
„For example, they could further reduce payment frictions by potentially increasing the speed and reducing the cost of payments (particularly if globally stable currencies were established),“ he added.
The governor also believes that Stablecoins and CBDCs can coexist and work hand in hand.
In this way, Bailey believes that „if the Stablecoins are going to be widely used as a means of payment, they should 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 digital CBDC currency, the governor did not actually offer much detail as to whether or not the country had made progress in developing such a currency.
Bailey said that while CBDCs have a lot of potential, launching one would require „careful consideration.
Therefore, it appears that a CBDC for the UK is being considered. However, no further information is available at this time.