Andrew Bailey said unless they acquire the characteristics of money stablecoins will only “purport to be money at least as a means of payment.” storeofvalue boe
at the Institute of International Finance, that the public’s confidence in this type of digital money is “needed to underpin financial stability.”
The BOE chief also used his April 12 speech to explain how the central bank currently defines money. According to Bailey, if something is seen as a store of value or a payment method then such an asset will be seen as money. As per the governor’s explanation, money can also be defined using terms such as inside money which is essentially commercial bank money and outside money which is in fact central bank money. Although their use as a payment method has grown, Bailey said unless they acquire the characteristics of money stablecoins will only “purport to be money at least as a means of payment.
“For money to fulfil its function as a means of payment, it requires stability of value. This is clearly not true of unbacked crypto. It could be a bet, a highly speculative investment or a collectible, but note that it has no intrinsic value, so buyer be very aware,” the BOE governor explained. Addressing the recent banking crisis sparked by the collapse of Silicon Valley Bank, the BOE governor stressed the need to “revisit the protection of inside money,” particularly in smaller banks.
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