Bank of England Governor Bailey Says Cryptocurrencies Are ‘Dangerous’
Known for his reluctant stance on decentralized money, the Governor of Bank of England (BOA), Andrew Bailey, has recently taken his anti-crypto rhetoric up a notch. Speaking at a meeting with lawmakers in London, Bailey stated that cryptocurrencies are “dangerous.”
Andrew Bailey Remains Sceptical About Cryptos
“Crypto-assets,” as the central bank’s official labels bitcoin and the rest, present a danger to the public, Bailey told the British Parliament’s Treasury Committee. The Governor’s statement on Monday reiterates his long-standing concern about decentralized digital currencies, Reuters noted in a report. Addressing the committee members, the head of Bank of England said:
I’m sceptical about crypto-assets, frankly, because they’re dangerous and there’s a huge enthusiasm out there.
Andrew Bailey’s latest criticism comes after previous statements revealing his negative attitude towards cryptocurrencies. The governor has in the past warned ordinary Brits they should not invest in crypto unless they are prepared to lose all their money.
The BOE chief believes digital financial assets such as bitcoin do not fulfill key functions of a standard means of payment. In early May, the banker stated that “I would only emphasize what I’ve said quite a few times in recent years. I’m afraid they have no intrinsic value,” but he also admitted that people can put “extrinsic” value on them. And in January, Bailey expressed doubts that any cryptocurrency would last.
Governor’s Report Reveals Growth and Inflation Worries
Andrew Bailey’s comments coincide with a turbulent period in the crypto space. Negative statements by other public figures, organizations, and governments have seriously affected cryptocurrency markets which have lost billions in the past days and weeks. However, the crypto-economy was doing pretty well until recently, compared to other sectors that have suffered from the Covid-19 crisis.
According to Bailey’s annual report to the Treasury Committee, the United Kingdom’s gross domestic product (GDP) fell by 1.5% in the first quarter of this year to 8.7% below its pre-pandemic level in Q4, 2019. And that’s despite the declining impact of various restrictions on economic activity. In the document published by the Bank of England on Monday, the governor notes:
Over the last twelve months we have consistently taken the view that activity in the economy would bounce back quite sharply, but the timing of that effect has been delayed by the further wave of Covid.
The report reveals that Andrew Bailey, who took over as BOE Governor in March 2020, is also concerned with the U.K.’s inflation not reaching its target rate. During the past year, the indicator has been at least one percentage point below the 2% goal. Bailey admits he has had to explain to the Chancellor of the Exchequer the reasons for that on multiple occasions, including the Covid-related drop in commodity prices, VAT cuts for certain services, and lower demand in general.
The Treasury Select Committee is appointed by the House of Commons to oversee government expenditure as well as the administration and policy of the Treasury, the Bank of England, and other public institutions. Bailey has previously served as BOA’s Chief Cashier, Deputy Governor, and Chief Executive of the Financial Conduct Authority.
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