Bank of England's Bailey casts doubt on new forms of money for retail use
Bank of England Governor Andrew Bailey on Friday questioned why new forms of money, such as stablecoins and central bank digital currencies for retail use, were needed for use in the wider economy.These technologies needed to demonstrate clear benefits - innovations like smart contracts in payments and anti-fraud technology - and prove they can function as money to justify widespread use by consumers, Bailey said."I remain to be convinced that we need to create new forms of money - such as Central Bank Retail Digital Currency - to achieve this," Bailey said in a speech delivered at the National Bank of Ukraine in Kyiv.The BoE is already researching and developing central bank digital currency for wholesale use by financial markets, which Bailey described as a natural next step from existing electronic money technology.Bailey's comments on Friday made clear his doubts about wider applications of the technology in the economy.Bailey also took aim at stablecoins, a type of cryptocurrency designed to maintain a constant value, and which usually attempt to maintain parity with the US dollar.Most existing stablecoins did not yet pass the tests of providing the assurance and singleness of money, Bailey said.Singleness of money means a currency is always interchangeable at par value in all of its forms, whether in cash or electronic money."In my view we should focus our attention on standards for stablecoins which ensure they do pass the test," Bailey said.Regulators in many countries are skeptical about cryptocurrencies as they are seen as speculative and as competitors to national currencies.Bailey repeated his view that unbacked cryptocurrencies like bitcoin lacked the characteristics of money and represented a risky and volatile investment asset."The buyer should beware," he said.