In a speech at the Brookings Institute today, Bank of England Governor Andrew Bailey discussed the potential for stablecoins and central bank digital currencies (CBDC). He doesn’t preclude a CBDC from existing alongside stablecoins and even stored in the same wallet. However, he made it clear that no stablecoin will be allowed to become a systemic payment method before central banks have agreed on standards.
Facebook’s Libra digital currency didn’t get a mention in the speech. But yet it seemed to be at the heart of his message.
Bailey outlined three kinds of innovative new monies. He dismissed cryptocurrencies as inappropriate for payments. Secondly, there’s e-money as defined by the EU and implemented in the UK. Here he is concerned that the public isn’t fully aware of the lack of government guarantees. And in the case of the issuer’s failure, there’s no guarantee of a return of funds.
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