Updated 25 Jun, 2021

Bank of England Says “Bitcoin is Not Money”, Focuses on a CBDC

Bank of England Says

Key Takeaways:

  • Bank of England slams Bitcoin saying it’s “energy inefficient” and “not money”
  • Governor Andrew Bailey says the central bank will focus on researching the benefits of a CBDC

Bank of England Governor Andrew Bailey took a hard line on Bitcoin. He said the digital asset and other cryptocurrencies are “not money”. He added, however, that stablecoins, digital tokens pegged to a sovereign currency, could become “systemic” in the modern financial system.

BoE’s Governor Says the UK’s Central Bank is Researching the Field of CBDCs

Governor Bailey made the comments during his appearance in TheCityUK’s annual conference. Mr. Bailey’s speech included remarks on the fintech revolution currently unfolding in the UK, saying that the country would most likely experience “a robust form of innovation.”

Bank of England’s Andrew Bailey highlighted that the UK’s central bank is exploring the field of stablecoins. He is doing this in order to find out whether the UK could benefit from having a digital version of the sterling.

“Stablecoins have the potential to be systemic in terms of their importance for the financial system and its stability,” Governor Bailey said. “They are distinct from cryptoassets such as Bitcoin, which have no backing and thus no anchor to provide stability of value. A cryptoasset is not money (hence the term cryptocurrency is misleading) and has no intrinsic value because it has no backing.”

Andrew Bailey Has His Focus on Stablecoins, not Bitcoin

Andrew Bailey has long been a critic of Bitcoin, saying the largest token by market cap is energy inefficient, a concern that in the last few months began raising doubts over the sustainability of the Bitcoin mining process.

Bank of England, according to the Governor, believes that a central bank digital currency (CBDC) could play an “important role in sustaining, and potentially expanding retail access to central bank money.” A digital sterling, for example, would be backed by the Bank of England and its value will be pegged at a ratio of 1:1 to the British pound issued by the UK’s central bank.

The race for CBDC research and development is heating up. Earlier in the month, Canada’s central bank said its own CBDC would be “greener than Bitcoin.” In May, Federal Reserve Chairman Jerome Powell said a CBDC would be a “complement to the US dollar.”

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