Governor Andrew Bailey sees the importance of blockchain and distributed LEDGER technology, but he disregards crypto as a future payments system.
Bailey did appear to have some foundational knowledge of crypto when discussing it on Monday on the “Jimmy’s Jobs Of The Future” Apple podcast. He stated a fairly widely acknowledged view that bitcoin would probably not be the payments network of the future.
He did admit though that the innovative technology coming out of bitcoin and crypto in general may well spin off and lead to other ideas emerging outside of crypto. Here he gave central bank digital currencies (CBDCs) as an example.
“I think we are seeing digital technology, and digital payments growing in the economy, and they will derive benefit from the underlying technology. Precisely what forms of crypto become the ones that will sort of survive into widespread use is still to be determined.”
The governor said that in the BOE’s role as a public policy authority it needs to create an environment where the innovation that happens in crypto can prosper, but can do so safely.
To this end, he said that we need a regulatory framework that inspires confidence. He says that this does rather fly in the face of some crypto libertarians who believe that the sector should be treated differently as regards regulation. He was very adamant that this shouldn’t be the case.
In the same vein he was also dismissive of the view of some in crypto who thought that the Russian sanctions should not apply in the crypto world just because “it is different”.
However, Bailey did see that policy needed to continue to adapt in order to encourage innovation and to accommodate it where possible. He said that if public policy did stay static then problems would surely arise.
When asked if he owned any bitcoin, the governor said that he didn’t, because in his view it didn’t have any intrinsic value. He thought it might have extrinsic value because people wanted to own it. He added: “People collect all sorts of things.”
The Governor of the Bank of England’s view on crypto does not appear to be as negative as that of others. He acknowledges that some exciting innovations are coming out of the sector, and that they need to be regulated with safety in mind, but without taking away from the benefits.
Of course, he has his own personal views on crypto, and he says that bitcoin has no intrinsic value. In turn, it can be argued that bitcoin’s scarcity, transparency, portability, and resistance to manipulation do give it intrinsic value, but history will judge who is correct here.
However, the mere fact that the governor is entirely open to innovation is very encouraging, and it is refreshing to see that he does not follow the trash-talking antics of other leaders in finance who perhaps ought to do their homework on crypto, no matter how unpalatable they might find it.