Bank of England Governor Raise Concerns About Bitcoin’s Efficiency

Bank of England (BOE) Governor Andrew Bailey has voiced doubts about Bitcoin’s viability as a mainstream financial service before the UK Parliament Treasury Committee. “My personal feeling is that it’s not taking off as what I might consider a core financial service,” he said. … For example, it is not very efficient to use Bitcoin as a payment mechanism.”

Deputy Governor Sarah Breeden of the BOE reiterated Bailey’s remarks, stating that the incorporation of cryptocurrencies into traditional finance is being hampered by the lack of a strong regulatory framework. She pointed out a changing environment in spite of this obstacle, raising the possibility of changes in regulatory strategies.

Stablecoins and CBDC

Bailey examined the difficulties presented by stablecoins, characterizing them as “opaque” and drawing attention to issues with their stability. Discussions of central bank digital currency (CBDC), sometimes known as “Bitcoin,” have touched on topics including programmability and privacy. Breeden said that because of the difficulties in putting into practice a digital currency supported by a central government, talks about CBDC are still in progress.

Digital currencies received little attention in the BOE’s December Financial Stability Report, which served as the main agenda item for the parliamentary hearing. It did, however, recognize that stablecoins and CBDC continue to be policy issues. The research underscored the necessity of tackling any hazards to financial stability that may arise from a possible surge in withdrawals from the banking system during periods of financial strain.

The study summarized a future examination of the execution of these suggestions by the end of 2025, even though it mostly reiterated earlier results and recommendations. Stablecoin legislation have been actively crafted by UK regulators throughout 2023; it is anticipated that these regulations will be formally implemented in 2025.

The future of cryptocurrencies, especially Bitcoin, is in jeopardy as the UK negotiates the complex regulatory environment. Digital currencies in the UK are likely to have a complex future, as shown by Breeden’s recognition of regulatory hurdles and Bailey’s doubts about its inefficiencies as a payment mechanism. The story becomes much more complex with the introduction of “Bitcoin,” necessitating careful thought on privacy and usability concerns.