Andrew Bailey, the Bank of England governor, said that crypto assets are not suitable for the world of payments. He revealed his thoughts during one of the virtual conferences hosted by the famous Brookings Institute. When asked about what he thought about cryptocurrencies and stablecoins and how their possible worth in the future, he said that BTC was merely an asset and was not related to money at all. He finds it difficult to believe that crypto assets could actually be an investment as their value fluctuates quite a lot.
Bailey shared his thoughts on cryptocurrencies and stablecoins when he talked about the adoption of innovation in the payment systems. But, he clarified that the stablecoins could provide some benefits like reduction of frictions in payments. But then he again warned that using stablecoins as a means of payment would mean that they also have the same standards as other payment options out there. He further highlighted the fact that a lot of stablecoins proposals do not include any legal claim for the crypto asset holders. They should provide the holder with a mechanism where they are supported and protected so that they can redeem them into fiat currency whenever needed.
The governor added that for stablecoins to become a global currency, it should be based on single currencies but would not mind accepting multi-currency stablecoins if it comes to that. He believes that stablecoins are a cross-border phenomenon. While it can be under one jurisdiction, it can be denominated in another and also be in use in a third country. Any regulatory body will have to keep these points in mind and offer a global response, especially for stablecoins that are meant for inter-country transactions.
In June 2020, a blockchain firm called L3COS, based out of the UK, submitted a proposal to the BoE or the Bank of England to create an operating system that is based on the blockchain so that the bank could issue digital currency under its supervision. Even in March 2020, the BoE published another paper on CBDCs that mentioned the changing landscape of digital payments and how CBDCs could play an important role in providing financial stability.