The Bank of England explained why crypto is not money
Date: 2023-07-13 Author: Karina Ziganova Categories: BLOCKCHAIN, CRYPTO PAYMENTS
Bank of England Governor Andrew Bailey believes that bitcoin (BTC) and other cryptocurrencies do not meet the standard of money.
According to the regulator, cryptocurrencies and stablecoins do not fit the two main signs of money security - the unity and finality of settlements. Unity means that money, regardless of where it is stored, should have the same value. In other words, it should be possible to exchange them at face value.
"In particular, they do not pass the basic tests for the uniqueness and finality of the settlement. It's not money," Bailey said.
Moreover, according to Bailey, this form of money is better classified as an "extremely speculative investment." At the same time, it welcomes advanced digital assets such as CBDCs.
"The finality of the calculations means that when we pay for something, we must be sure that the payment really happened," said the governor of the Central Bank.
The Bank of England's guidance against digital currencies
Bailey has previously stated that he does not see the point in the digital pound. He noted that there is already an "updated wholesale system of cash settlements of the central bank." If a digital pound appears, then at the initial stage it will be possible to store only a limited amount in it.
Moreover, the head of the digital currency project at the Bank of England, Tom Matton, also believed that Britcoin could eventually work without blockchain. However, the British Central Bank will still test different versions of the ledgers, including the traditional blockchain, to determine the best scenario for using the central bank's digital currency.
The Bank of England is exploring digital money without Bailey
Despite Bailey's refusal to recognize digital money, the Bank of England is already recruiting a team of 30 people to begin developing a CBDC. Other details about the new BOE division, as well as what kind of specialists are planned to be attracted, are not indicated.
In addition, the British Treasury began consulting on the development of a digital pound with the participation of individuals and companies. So far, the agency has not come to a clear understanding of the work of the CBDC: how the digital national currency will function with cash and how payments will be made using the digital pound.
