Bank of England Governor warning: Digital currencies not built to last

Bitcoin mania continues to pull investors into the fold. Photo / Getty Images

Digital currencies are not built to last without stronger design and governance, the Bank of England Governor has said.

Speaking during an online Davos seminar on Monday, Andrew Bailey welcomed digital innovation in areas such as payments but struck a more sceptical tone on digital currencies like Bitcoin.

He said: "Are we here to stay in terms of digital innovation? Yes. But have we landed on what I would call the design, governance and arrangements for what I might call a sort of a lasting digital currency? No, I don't think we're there yet honestly."

Mr Bailey added "I don't think crypto-currencies as originally formulated are it" due to "this whole question of people having assurance that their payments are going to be made in something that's stable value".

The Bank of England is examining the potential for a central bank digital currency in response to the rise of crypto-currencies, although the governor has said the case for one was "not a slam dunk".

Mr Bailey's comments came after another volatile session for Bitcoin, which the Governor last year said lacked "intrinsic value".

European Central Bank president Christine Lagarde last week called the crypto-currency a "highly speculative asset which has conducted some funny business and some interesting and totally reprehensible money-laundering activity".

The price of Bitcoin - described by one market participant as "tulip mania" - has veered wildly this year, topping US$40,000 (NZ$55,500) on January 8 and then crashing below US$30,000 last week in its biggest sell-off since March.

The price bounced again to US$33,845 on Monday.

- Telegraph Media Group