The latest UK Parliament Treasury Committee meeting saw discussions centered around digital currencies, focusing on Bitcoin and the prospects of a central bank digital currency (CBDC) colloquially called “Britcoin.” Bank of England (BOE) Governor Andrew Bailey, alongside BOE Deputy Governor Sarah Breeden, provided their insights on the current state of digital currencies during the session.
Bitcoin loses momentum as a payment method
Bank of England Governor Andrew Bailey expressed skepticism about Bitcoin’s role as a viable payment method. He stated that Bitcoin is “not taking off” and cited its inefficiency as a significant hindrance. Bailey emphasized that, in his view, Bitcoin lacks intrinsic value, echoing his previous statements on the subject. He remarked, “My sense is that it’s not taking off as what I might call a core financial service. For instance, using Bitcoin as a payment method is pretty inefficient.”
Deputy Governor Sarah Breeden highlighted the absence of a comprehensive regulatory framework as a key challenge for integrating cryptocurrencies into traditional finance. However, she also noted that the regulatory landscape was evolving to address these concerns.
Governor Bailey further discussed the challenges posed by stablecoins, expressing doubts about their stability and transparency. He referred to stablecoins as “opaque” and emphasized the complexity of regulating them effectively.
Central bank digital currency (CBDC) – “Britcoin”
The committee briefly touched upon the concept of a CBDC, playfully referred to as “Britcoin” during the discussion. Sarah Breeden acknowledged that debates regarding CBDCs continued, with ongoing deliberations regarding issues of privacy and programmability.
The meeting also focused on the BOE’s latest Financial Stability Report, which allocated limited space to digital currencies. The report highlighted the consideration of policy choices related to stablecoins and CBDCs, particularly in mitigating financial stability risks.
The report stated, “This has included how to mitigate financial stability risks arising from the potential for a greater proportion of deposits to be withdrawn from a banking system in a stress.”
In addition to these discussions, the report primarily reviewed previous findings and recommendations, with a review of implementation planned by the end of 2025. Regulators in the UK have been actively working on stablecoin regulations throughout 2023, with these regulations expected to be enforced in 2025.
The road ahead for digital currencies
The recent UK Parliament Treasury Committee meeting shed light on the ongoing debate surrounding digital currencies, particularly Bitcoin, and the prospects of a CBDC. While some expressed doubts about the efficiency and regulatory challenges of existing digital currencies, it is evident that discussions in the financial sector are evolving.