March 18, 2018

Main » Cryptocurrencies are failing as money, BoE chief says

Cryptocurrencies are failing as money, BoE chief says

03 March 2018

Mark Carney, the Bank's governor, used a speech in London on Friday to attack a situation of "anarchy" in the trading of cryptocurrencies, with the market having grown rapidly on unregulated exchanges.

Speaking on the topic "To isolate, regulate or integrate", Carney said that banning and sealing off crypto-assets as done by China could lead to the hampering of future financial innovations.

Carney, who was unable to travel to Scotland because of the adverse weather conditions across the United Kingdom, noted "the average volatility of the top 10 cryptocurrencies by market capitalisation was more than 25 times that of the U.S. equities market in 2017". It is likely that the great success but finite nature of Bitcoin has spurred others to try to snag a portion of the market in various different ways, just to get on the virtual currency (VC) bandwagon before the oft-prophesized bubble burst occurs.

"The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system", he said. Carney did not call for a ban on cryptocurrencies such as Bitcoin - and said the underlying technology had some promising applications.

Mark Carney, Governor of the Bank of England, in a panel to discuss central bank communication on November 14, 2017 in Frankfurt, Germany. Exchanges in these countries are now required to meet the same set of anti-money laundering and countering of terror financing standards as other financial institutions. "The short answer is they are failing". "Being part of the financial system brings enormous privileges, but with them great responsibilities".

Carney, who heads the a global rule-making body, the Financial Stability Board (FSB), expressed doubts about cryptocurrencies earlier this year and his speech, intended for a Scottish student economics conference, expanded on these.

"If widely adopted, however, isolation risks foregoing potentially major opportunities from the development of the underlying payments technologies."

This week, the European Union's financial services chief said Brussels was ready to regulate cryptocurrencies if risks from the sector are not tackled at the global level. They now operate in murky legal territory and a year ago led SEC Chairman Jay Clayton to warn investors that "tales of fortunes" spun by companies may not always be true.

He added it could "transform everything from how people manage of their interactions with public agencies, including their tax and medical records, through to how businesses manage their supply chains".

Cryptocurrencies are failing as money, BoE chief says