Digital Money Risks Attracting Criminals, BOE’s Bailey Warns - BLOOMBERG
BY Bloomberg News,
(Bloomberg) -- Central bank digital currencies risk attracting “money launderers and cyber criminals,” Bank of England Governor Andrew Bailey warned in a speech on financial innovation.
Addressing the City UK annual conference on Thursday, he said while regulators should encourage financial innovation as a potential benefit for the economy, finance shouldn’t get a “free pass.” Rather, new forms of digital money should be “trusted as a store of value and as an accepted means of payment.”
The BOE along with many of its peers is considering whether to introduce a digital currency that would smooth the way online payments work and also serve some of the functions consumers like about bitcoin and other crypto currencies. The central bank has said that a digital pound would be issued directly to consumers -- not via banks -- in a number of years, named a “stablecoin” to differentiate from bitcoin.
“I have met crypto enthusiasts who take the libertarian view that something backed by nothing has more confidence in value than something backed by the state,” said Bailey, who also oversees banking regulation and has responsibility to assess stability threats to the economy. “Suffice to say, that is not a view I agree with.”
A BOE discussion paper published last week modeled the impact of a fifth of all retail banking deposits going digital, which it said may impact money markets. To maintain financial stability, the central bank may limit the speed and scale of any transition to digital money, Bailey said.