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HomeBTCBank of England Governor Criticizes Bitcoin's Inefficiency as Payment Method

Bank of England Governor Criticizes Bitcoin’s Inefficiency as Payment Method

Bitcoin is reportedly losing momentum as a payment method due to its inefficiency, according to Bank of England (BOE) Governor Andrew Bailey. In a meeting with the United Kingdom Parliament Treasury Committee on January 10, Bailey, along with BOE Deputy Governor Sarah Breeden, discussed the BOE’s latest Financial Stability Report.

During the meeting, Bailey reiterated his view that unbacked cryptocurrencies, such as Bitcoin, hold no intrinsic value and are inefficient as payment methods. He expressed skepticism about the adoption of Bitcoin in core financial services. Breeden contributed to the discussion by pointing out the challenges posed by the lack of a regulatory framework for cryptocurrencies, although she acknowledged that this situation is evolving.

The conversation also covered the topic of stablecoins, which Bailey described as “opaque” and challenging for regulators, casting doubt on their stability. The meeting briefly mentioned the concept of a Central Bank Digital Currency (CBDC), referred to as “Britcoin.” Breeden highlighted ongoing debates over issues like privacy and programmability related to CBDCs.

The December report, which was the main focus of the meeting, dedicated a minimal portion to digital currencies. It discussed policy considerations for stablecoins and CBDCs, especially how to handle the financial stability risks that could arise if a significant proportion of deposits were withdrawn from the banking system during a crisis.

Furthermore, the report reviewed past findings and recommendations, with a note that the Financial Stability Board (FSB) plans to review the implementation of its recommendations by the end of 2025. In the UK, regulators have been actively working on stablecoin regulations throughout 2023, with an expectation that these regulations will be enforced by 2025.

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