Bank of England Governor, Andrew Bailey has spoken on the future of digital currencies in the yearly Davos forum organized by the World Economic Forum, saying that existing cryptocurrencies lack the structure necessary to become a payment method over the long term.
“Have we landed on what I would call the design, governance, and arrangements for what I might call a lasting digital currency? No, I don’t think we’re there yet, honestly. I don’t think cryptocurrencies as originally formulated are it,” Bailey said.
Indeed, the volatility of digital currencies is making them hard to be used for day-to-day payments. Also, the so-called Bitcoin bulls believe in holding the digital currency rather than using it to make transactions. Additionally, technological shortcomings clog the network in busy times, and the transaction fees also skyrocket.
“The whole question of people having assurance that their payments will be made in something with stable value…ultimately links bank to what we call fiat currency, which has a link to the state,” the central bank governor added.
He further questioned the privacy of digital currencies.
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“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,” he added.
In Favor of Stablecoins and CBDCs
Bailey spoke at the crypto-specific panel of the virtual Davos forum yesterday and shared the stage with Western Union’s President and CEO, Hikmet Ersek. There will be another season on crypto on Thursday.
The Governor’s comments came when the British central bank is evaluating the prospect of issuing a digital currency as an alternative to the traditional pound sterling.
“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,” he said.