Current cryptocurrencies won’t last as a means of payment in long run: BoE governor says
LONDON (UK) – Bank of England Governor Andrew Bailey has said that no cryptocurrency possesses a structure that is likely to permit it to work as a means of payment over the long run. He was addressing an online forum conducted by the Davos-based World Economic Forum on Monday.
“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,” he said.
The most popular cryptocurrency, bitcoin, registered a record high of $42,000 on Jan. 8 and dipped as low as $28,800 last week. There was far greater volatility than what is found with normal currencies.
“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,” Bailey said.
Like the European Central Bank, the BoE is also exploring the feasibility of coming out with its own digital currency. This would have allowed people to make electronic payments without involving banks. In theory, it would have helped avoid the volatility that makes bitcoin impractical for trade transactions.