The overall aim of the report is largely to define what actually constitutes money, which it defines strictly as a widely accepted, government-backed IOU. Bitcoin isn’t widely accepted, isn’t backed by any government, and isn’t an IOU. As such, bitcoin and other virtual currencies and related “e-money” aren’t considered currency by the Bank of England.
In effect, the Bank of England is declaring that virtual currencies aren’t within their domain to regulate.
In a sense, this is a variation on the position taken by Federal reserve chairwoman Janet Yellen. Not fitting the legal definition of currency, Yellen told the Senate Banking Committe last month, the U.S. central bank has absolutely no authority over virtual currency.
This is not the first time the Bank of England has claimed that bitcoin regulation is not its job. Last year, Bank of England chief cashier Chris Salmon noted that while bitcoin was “genuinely innovative,” the technology was not something likely to be adopted by central banks, and extremely unlikely to replace traditional currency.