Unbacked cryptocurrencies have no intrinsic value and those investing in them should be prepared to lose all their money, the Governor of the Bank of England has warned.
With many digital assets having seen their values fall sharply, and with industry high profile casualties like the collapse of exchange FTX, Andrew Bailey said it was also not the case that backed stablecoins - which are often pegged to currencies - were necessarily safe investments.
While he said the central bank is supportive of innovation in stable digital assets, consumers needed to understand the risks.
Speaking on a visit to South Wales, Mr Bailey said: “It is important to draw the distinction between unbacked crypto and stablecoins. I have been saying for at least four years that unbacked crypto, in my view, has no intrinsic value and if you want to own it then please understand that you could lose all your money, which some people obviously have. It is not money or a payments mechanism or something you could use as a reliable investment in that sense.”
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On stablecoins Mr Bailey said: "Our financial policy committee has put out its own views on the principles that should govern this, but one of the most important is that it must have assurance of value. I am very strongly of the view that the public can reasonably expect that the things that are reported to be money hold value. We have had examples, not so much in the 海角视频, but elsewhere in other countries, where that has not been the case and where things that have been presented as stablecoins have been anything but and have turned out to be high risk or worthless investments in some cases.
“There is provision in the legislation going through parliament to regulate these things and I think that is important. We are certainly not holding ourselves out against the idea that there is a role for digital money and we are prepared to see that innovation explored and seeing where it goes, but it has to be done by maintaining high standards.”
Following the fallout from the disastrous mini-Budget of former Chancellor Kwasi Kwarteng last September, mortgage rates spiked with many providers also removing products. However, the mortgage market has revived of late.
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Mr Bailey said: “The encouraging thing is that we have seen mortgage rates come off. I was hoping that would happen, because most new mortgages are now fixed rate, so they are priced off the market curve. The market curve was very elevated back in September and October, but it has come down and that has been passed through into mortgage pricing, which is good. And the number of mortgage products have gone up again as it came down a lot in September and October as banks were reluctant to price at that point.”
On house prices he said: “We are seeing some evidence of softening and most of the various measures of house prices show that, also the activity measures in the housing market have come off the last month or two.”
Use of Cash
While the use of cash has declined he said the bank remains committed to it, as long there remains public demand.
He said: “As the issuer of cash, what I would be very clear on is that we have got a very firm commitment to ensuring cash will be available as long as the public wants it.
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“The paradox we have is that we can see and observe that cash usages have gone down in terms of payments, but the stock of cash that we have issued, and is on our balance sheet, has not gone down at all. So, there is this difference between the use of cash and the amount that is out there. I think they are around 18 billion of our bank notes that are out there somewhere. What I would observe from that is the public wants cash, so it is important that they have access to it.
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“When we do surveys on why people want cash, one of the reasons that comes back is for some people it is a budgeting tool as if you haven’t got it you cannot use it. That is important as people who find that valuable should have that service and we are not seeking to take that away.”
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