Tuesday, 18 December, 2018

Mark Carney snubs cryptocurrencies

Cryptocurrencies
Cryptocurrency Regulation Called for by Bank of England Governor Cryptocurrencies Cryptocurrency Regulation Called for by Bank of England Governor
Nellie Chapman | 03 March, 2018, 03:45

He also said that at present, cryptocurrencies didn't pose a risk to the financial system, but if the rate of investment continued then it might have serious repercussions for the global economy because of the market's volatility, which he claimed was 25 times that of the United States equities market in 2017.

For now, Carney said that in his view "crypto-assets do not appear to pose material risks to financial stability".

The governor of the Bank of England has said it has no use for the technology underpinning bitcoin and other cryptocurrencies as he warned that despite their hype they were unlikely to be "the future of money".

The short answer is: they're failing. The price of Bitcoin soared at the end of last year, rising nearly six-fold in the last three months of the year.

"The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system", Mr Carney said.

The inquiry will assess how the government and financial services regulators such as the Financial Conduct Authority (FCA) and the Bank of England can create an environment to protect consumers, without holding back innovation.

"Crypto has the potential to be hugely disruptive to the major financial centers, which is partly behind the heavy-handed response from Mark Carney".

Cryptocurrencies
Cryptocurrency Regulation Called for by Bank of England Governor
Cryptocurrencies Cryptocurrency Regulation Called for by Bank of England Governor

Some market participants even think that the volatility around bitcoin contributed to the turmoil that gripped financial markets in February.

Carney's comments follow a warning this week from Agustin Carstens, the general manager of the Bank for International Settlements - an international organization for central banks - that bitcoin "has become a combination of a bubble, a Ponzi scheme and an environmental disaster".

Meanwhile, in China, officials are cracking down on anyone connected to trading in cryptocurrencies, which has been banned since a year ago.

Carney said that approach risked stifling potentially big opportunities to streamline payments systems, making it easier for example for people in a pub to split the cost of a round of drinks without involving the traditional banking system.

In his speech, he lauded the potential value of the underlying technology of Bitcoin, but said the digital currencies themselves have failed as a form of money and rejected the prospect of a central bank digital currency in the near future.

These must now evolve to meet the demands of fully reliable, real-time, distributed transactions. "Anarchy may reign on the dark web, but in the United Kingdom it's just a song that your parents used to listen to", he said addressing the Scottish Economics Conference in Edinburgh.