Bank of England Governor Andrew Bailey held the central banker's line against cryptocurrency proliferation at the Davos conference Monday.

At the same time, Bailey, a panelist at Davos' digital currency talk, stressed that digital innovation in payments is here to stay. It's just a matter of finding the right design and governance model for a "lasting digital currency," he said.

"I don't think we're there yet," said Bailey, adding, "Honestly, I don't think cryptocurrencies as originally formulated are it."

Bailey said the problem rests with value and volatility. People want their payments conducted over a stable medium, which the original cryptocurrency, bitcoin, certainly lacks.

Enter fiat innovation. Bailey suggested fiat systems could be made more efficient through digital means.

"We're right still to debate stablecoin, we're right to debate central bank digital currency. Those issues, I think, are very much up for grabs," he said.