New Bank of England Governor Says Bitcoin Hasn’t Caught on
The attitude of central banks towards cryptocurrencies has never been overwhelmingly positive, with many regulators warning about the dangers of the new asset class. The future governor of England’s central bank was the latest to share his thoughts on cryptocurrencies, saying that he believes they have no intrinsic value.
Andre Bailey, the incoming governor of the Bank of England, was questioned by the U.K. parliament’s Treasury Committee about his strategic vision for Britain’s central bank and financial industry. Among the numerous topics that were touched on during the hearing were his sustainability in the role of the governor and his stance on cryptocurrencies.
Bailey, who currently serves as the chief executive of the Financial Conduct Authority (FCA), U.K.’s chief financial regulator, argued that putting money into the crypto industry was guaranteed to fail.
“If you want to buy Bitcoin, be prepared to lose all your money,” he told the Treasury Committee.
The future governor then went on to explain that while he believes people should be able to buy the coin, they should be aware of what it is—an asset with no intrinsic value.
“It may have extrinsic value, but it has no intrinsic value.”
Bailey’s comments as no surprise to his supporters—in 2017, the chief of the FCA gained notoriety for describing Bitcoin as an “odd commodity”. With neither central banks nor the government standing behind the “currency”, it was an insecure investment people should be wary of, BBC reported at the time.
Back in 2017, he said that increasing the role of financial regulators in overseeing the new asset class was not a pressing issue. However, Bitcoin and other cryptocurrencies actually fall under the jurisdiction of the FCA. It remains unclear whether Bailey will push for more regulation when it comes to digital assets.
The upcoming governor also shared his thoughts on Facebook’s Libra. Mark Carney, the current governor of the Bank of England whom Bailey is set to replace in the following weeks, said that Libra is “systemically important.” Carney also called for the creation of a new, Libra-like virtual reserve currency that would replace the U.S. dollar. Bailey, however, doesn’t seem to share Carney’s attitude when it comes to Libra.
“I think the initiative has been handled pretty poorly in the sense that it was very vague,” he said.
He said that Libra developers haven’t been able to answer the question of whether people owning Libra token would have a direct claim on the assets that underpin it. This, he explained, was what raised the biggest red flag.
“You could never get a completely clear answer to that question, [the] consequence of which is I remain pretty suspicious.”
Apart from that, Facebook’s use of personal data generated by the currency would also be a big problem for regulators, Bailey said.