BoE’s Bailey ‘sceptical’ big tech could be regulated like banks in digital currency race

Bank of England governor Andrew Bailey has raised the prospect of Threadneedle Street creating its own digital currency amid fears it would be difficult to control coins created by the private sector.

As digital payments solutions continue to gain in popularity, many should be regulated given they are fulfilling the “essential public functions” of money, Bailey told a Bloomberg event on 14 September.

However, Bailey said that the bank might be forced to create its own stablecoin-style solution in light of the tough questions such innovations will pose of regulators.

“If some of the big tech companies want to have their own currencies, that’s a big challenge to [the banking] system and we have to think about how we respond to that,” Bailey said. “We understand why you want to have money in your system, but the better answer might be to have our money rather than their money.”

READ Xavier Rolet: How central banks could end the crypto experiment

Bailey said he was “sceptical” that the central bank could manage big technology companies in the way it regulates banks, noting that banks would understandably raise competition concerns should their market be regulated, but technology firms’ financial activities were not.

“If we say we can’t necessarily regulate these companies — you know we have never historically been happy with banking and commerce together — the answer is we will create a digital currency which can be used, but that has implications and we have to think those through,” Bailey added.

The comments come as the likes of Facebook continue to pursue private stablecoin projects such as Diem, despite concerns across the political and regulatory spectrum.

READ Bank of England launches Treasury-backed taskforce for a UK digital currency

In June, Bailey’s predecessor Mark Carney warned that while central bank projects have launched efforts to keep pace, the speed at which cryptocurrencies, privately-issued stablecoins, and non-fungible tokens are proliferating could mean central banks struggle to counter systemic risk in those markets.

Bailey noted that all central banks were in different stages of evaulation the prospects for a central bank digital currency, and he did not think the Bank of England was behind on the issue despite China progressing to consumer trials.

“We talk a lot about this subject and I think we will be talking even more,” he said.

To contact the author of this story with feedback or news, email Justin Cash

Most Related Links :
honestcolumnist Governmental News Finance News

Source link

Back to top button