Bank of England Governor: “Bitcoin Has Failed as a Currency but Blockchain Technology Has Promise”
Bank of England Governor Mark Carney, has said that the time to hold the crypto asset ecosystem to the same standards as the rest of the financial system has come. He made these remarks during a speech which he addressed at the Scottish Economics Conference in Edinburgh via a video link on March 2, 2018.
The Governor stated the following:
“The Bank of England’s FPC is currently considering the risks posed(by cryptocurrencies) to UK financial stability and also, internationally, the Financial Stability Board (FSB) will report to the G20 in Argentina later this month on the financial stability implications of crypto-assets.”
Carney went on to add that the rising prices of these cryptocurrencies exhibit all the classic hallmarks of previous bubbles including new paradigm justifications, broadening retail enthusiasm and extrapolative price expectations.
He backed his pessimism by highlighting that digital currencies lack any intrinsic value or external backing, Plus, he concluded, the average volatility of the top ten cryptocurrencies was more than twenty-five times of the US markets in 2017.
Governor Mark Carney was speaking about “the future of money,” where he began with a brief review of the definition of money and how it had evolved over the years. This retracement is where cryptocurrencies made a short part of his speech.
No major retailer, either online or offline, accepts bitcoin as a payment in the United Kingdom, according to the financier. But, upon further reflection, this statement rings particularly false. A quick google search reveals more than a dozen different merchants who have adopted the currency, both on- and offline.
The bank chief went on to claim that the overhead of accepting cryptocurrency payments has, so far, not paid off for any e-commerce store, as is evident by companies retracting the option, such as the gaming platform Steam in 2017.
As reported by Reuters, Carney is of the belief that digital currencies must be termed as crypto-assets because they aren’t real currencies yet. But, he also highlighted the positive transformation and merits of having cryptocurrencies as money.
He cautioned that policymakers across the globe must not stop the innovation happening in the blockchain industry, as it could create a new financial revolution and also offer a more reliable payment service.
“Crypto-assets do not appear to pose material risks to financial stability,” he concluded, but also warned that due to the internal structure of these digital coins, it becomes tough to trace the owner of these crypto wallets. As a result, cryptocurrencies are becoming the favorite tool to transfer money for those involved in illegal activity.
He later said that isolating or banning the cryptocurrency market wouldn’t be a good move and there was a need to regulate the crypto-asset ecosystem to combat illicit activities, promote market integrity, and protect the safety and soundness of the financial system.
Carney was not short of cynicism when he told students at London’s Regent’s University that bitcoin had failed as a cryptocurrency. He concluded the following:
“It has pretty much failed thus far on the traditional aspects of money. It is not a store of value because it is all over the map. Nobody uses it as a medium of exchange.”
Bitcoin and cryptocurrencies were a hot topic of discussion when world leaders and heads of central banks met at Davos for the World Economic Forum in January 2018. As is becoming the general viewpoint, each country across the globe has a different view pertaining to the legality and future of bitcoin as a currency of the future.