Bank of England chief Andrew Bailey warns on cryptocurrencies after market plunge saying they have ‘no intrinsic value’
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The governor likened purchasers of crypto assets to hoarders of curios – saying ‘people collect all sorts of things’.
He argued that products such as Bitcoin were not ‘practical means of payment’ even though technology such as blockchain was undoubtedly ‘important’.
The comments, in an interview with the Jobs of the Future podcast hosted by ex-government adviser Jimmy McLoughlin, came amid a dramatic plunge in the values of many popular cryptocurrencies.
The assets are a form of digital money that use mathematics to create a unique piece of code that customers invest in.
Bank of England governor Andrew Bailey likened purchasers of crypto assets to hoarders of curios – saying ‘people collect all sorts of things’
Bitcoin was the original digital currency started in 2009 to bypass central banks, and an increasing number of offshoot currencies have been founded in recent years as well as digital art called non-fungible tokens.
During the pandemic, interest in such assets boomed with the market having blown up in size from around $780billion (£624billion) at the start of 2021 to around $1.23trillion (£984billion) in 2022.
However, a ‘crypto winter’ has seen many crash, losing investors billions and fuelling fears that it is the starting point of a wider stock market plunge.
More than $200billion (£160million) was wiped off the cryptocurrency market on 12 May alone.
Mr Bailey said that the ‘underlying technology’ from cryptocurrencies were important, stressing that the Bank is looking at its own digital currency.
‘What I think is to be determined is, if we are much more likely to be living in a world of digital currency than old fashioned sort of payment methods, precisely what form of digital currency, digital use, becomes the one that becomes the accepted norm,’ he said.
‘In terms of payments I don’t think it will be crypto in the a sort of Bitcoin sense of the term. I don’t think that is really a practical means of payment.’
Mr Bailey, who confirmed he does not hold any crypto himself, said: ‘I am probably not liked by the advocates of Bitcoin because I have said I don’t think it has any intrinsic value.
‘It can have extrinsic value in the sense that people want to own it – people collect all sorts of things – but it doesn’t have intrinsic value.’
The Financial Conduct Authority has warned that it is hard to curb the public’s enthusiasm for risky cryptocurrencies, which have been promoted by high-profile celebrities.
The volatile cryptocurrency has lost all of its value