Next Bank of England Governor Andrew Bailey Says Bitcoin 'Has No Intrinsic Value'

Siamak Masnavi

On Wednesday (March 4), Andrew Bailey, the man who will become on March 16 the new Governor of the Bank of England, explained his stance on Bitcoin.

On 20 December 2019, Bank of England (BoE), which is the UK's central bank, announced that Bailey, who was the head of the Financial Conduct Authority (FCA) at the time, would be its next governor.

Bailey's comments about Bitcoin during a meeting of the Treasury Committee of the UK Parliament on Wednesday. 

Here's what he said:

"There’s no guarantee of the value of Bitcoin. I've said publicly, because we were concerned about it,... if you want to buy Bitcoin, be prepared to lose all your money.

"If you want to buy it, fine, but understand that what you've got has no intrinsic value. It might have extrinsic value, but it has no intrinsic value... it hasn't caught on much..."

This was not the first time that the incoming BoE governor has stated his negative view of Bitcoin. 

According to a report by the BBC, on 14 December 2017, when the Bitcoin price was around its all-time high, Bailey, who was the head of the FCA back then, essentially told the BBC in an interview on news and current affairs program Newsnight that investing in Bitcoin was a form of gambling.

These are some of his comments from that interview:

  • "It's not a currency, it's actually not regulated in its Bitcoin form."
  • "It's a very volatile commodity in terms of its pricing... We know relatively little about what informs the price of Bitcoin... It's an odd commodity as well, as the supply is fixed."
  • "If you want to invest in Bitcoin be prepared to lose your money - that would be my serious warning."

He also pointed out that it was not up to the FCA, but the UK Parliament whether a commodity like Bitcoin should be regulated:

"It would be for Parliament ultimately to make that choice if it wished to do so.

"I don't press for that providing people understand very clearly this is a very volatile commodity.

"[But] if parliament wants to go further we will happily provide the evidence we have and will support the decision they want to take."

Bailey also was asked in that interview whether it was appropriate to think of Bitcoin as a currency. He said:

"By adopting the name of cryptocurrency there is a risk that some people regard it as the same as what an economist would call a fiat currency...

"A fiat currency is backed by the state and that's what preserves the value of the currency through the actions that central banks take.

"Bitcoin is not that - it's not a currency."

Featured Image by "derwiki" via Pixabay.com