In the last few years, many people worldwide have ventured into the crypto market, trading one form of digital asset or another. The mainstream adoption is making people more and more comfortable with using cryptocurrency, and it’s not uncommon for people to argue that it is a substitute or replacement for physical cash.
However, some influential figures from the world of traditional finance and banking couldn’t disagree more. Such is the recent analysis given by the governor of the Bank of England, Andrew Bailey. In his analysis, Bailey mentioned that people should never mistake digital assets for cash.
The governor prefers stablecoins to decentralized assets
While the governor is not that big on digital assets, he was keen to add that stablecoins could become an essential addition in the financial sector. In the speech that Bailey gave at TheCityUk’s conference, he predicted that companies in the FinTech sector would witness what he described as tough love in the years to come. He also went further to mention that he foresaw the United Kingdom with a vast amount of innovation.
Bailey also said that the United Kingdom is presently researching stablecoins pegged to fiat currencies. He conceded that they are beginning to look into creating their own Central Bank Digital Currency. While the country is concerned about making its own CBDC, Bailey also issued another warning to traders of digital assets across the country on the dangers of trading coins like Bitcoin.
Bailey said that stablecoins could become of systemic importance:
“Stablecoins have the potential to be systemic in terms of their importance for the financial system and its stability.”
He also pointed out that the term cryptocurrency is misleading as crypto assets have no legal backing and possess no intrinsic value whatsoever. The BoE governor also said that he has met with many crypto enthusiasts who have mentioned that they would prefer an asset backed by nothing over an asset backed by the state, but Bailey is not buying that argument.
