The governor of the Bank of England has broken his silence about the pressure Nigel Farage put on him to drop a cryptocurrency policy that could be costly for Reform UK’s billionaire backer, saying he is “able to spot” and resist lobbying.
Andrew Bailey’s comments, in a letter seen by the Guardian, come as Farage’s decision not to disclose a £5m gift from the Thailand-based crypto tycoon Christopher Harborne has triggered the biggest crisis of his political career.
On Tuesday, the Reform UK leader said he would resign as an MP amid a parliamentary standards investigation into the payment from Harborne and another into undeclared support from his supporter, the convicted fraudster George Cottrell.
Denying any wrongdoing, Farage called for a “people versus the establishment” byelection, but the Conservatives, Labour, Restore Britain, the Greens and Liberal Democrats said they would boycott it, accusing him of trying to divert attention from the financial allegations.
Farage has said Harborne asked for nothing in return for providing two-thirds of the funding received by Reform and its predecessor, the Brexit party. But the Guardian revealed in June that Farage used a private meeting with Bailey in September to demand that the Bank drop plans for a state-issued rival to the cryptocurrency that appears to make Harborne as much as £1bn a year.
Farage later told a crypto conference in London: “I asked [Bailey] straight: ‘Are you still progressing your plans for a British central bank digital currency?’ And the answer was: ‘Yes.’”
To thwart the Bank’s plan, Farage added, he would be “prepared to go to prison”. He claimed the Bank’s digital currency would be introduced as part of a digital ID scheme, though this is not part of the proposals.
Lobbyists for Tether, the El Salvador-based company part-owned by Harborne that issues the world’s most widely traded cryptocurrency, have written to the Bank arguing against its plans for a “Britcoin”. They say it could cut demand for Tether’s so-called stablecoins, which maintain the same value as state-issued money.
The Labour MP Joe Powell wrote to Bailey seeking details of his meeting with Farage, which the Bank has refused to release under freedom of information law. In his reply, seen by the Guardian, Bailey says the Threadneedle Street meeting was arranged at the request of Richard Tice, the Reform MP and deputy leader, “following an exchange of letters”.
Bailey writes: “As a general point, I recognise that we are, by the nature of the Bank’s role, regularly subject to lobbying. I can assure you that we are able to spot this and appropriately discount it.”
Bailey goes on: “Following our meeting, Mr Farage spoke with the press outlining that we had discussed a range of topics, including cryptocurrencies.” Farage has, Bailey says, “made his views about cryptocurrency regulation in the UK” and on the Bank’s plan to issue a digital currency “very clear”.
Bailey writes: “I am happy to confirm that no policy changes have taken place as a result of interventions by Mr Farage.”
Last month, when the Bank issued its updated policy on stablecoins, it said it was still considering issuing its own digital currency.
Bailey adds in the letter: “Periodically, I meet with the leaders of the main parties … explaining our role and decisions to those to whom we are accountable.”
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Farage has said he urged Bailey to drop plans for a cap on how many stablecoins individuals in the UK could own, telling him: “Listen mate, you’re being a dinosaur.” Farage has claimed Bailey changed his mind as a result. After a consultation, the Bank dropped the planned cap.
Powell said: “I’m pleased the governor of the Bank of England has confirmed Nigel Farage’s brazen lobbying attempt on behalf of crypto billionaires was unsuccessful. It’s clear he has no regard for independent institutions, and if Reform were to form a government, it would be one dominated by the billionaire interests who line Farage’s pockets.”
Phil Brickell, the Labour chair of the parliamentary group on anti-corruption and responsible tax, has called on the parliamentary standards commissioner to open an investigation into whether Farage attempted to pressure Bailey, in breach of lobbying rules.
A Reform spokesperson said: “Nigel Farage has expressed his strong opposition to central bank digital currencies since early 2021. His remarks to Andrew Bailey are consistent with his longheld belief that the UK should be a global hub for regulated cryptocurrency innovation and investment.”
When the Guardian asked Harborne about Farage’s intervention with Bailey, his lawyers did not give detailed responses, but said: “Mr Harborne will not comment on fantasy.”
Farage has become a champion of cryptocurrency, and of Tether in particular, since Harborne embraced his political project. Reform’s sole piece of draft legislation is a bill that would cut taxes on crypto profits. For a fee, Farage has plugged obscure cryptocurrencies on the video site Cameo.
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