Bank of England’s Governor Mark Carney: Cryptocurrencies are failing as forms of money

• “Cryptocurrencies have exhibited the classic hallmarks of bubbles,” says Carney.
• It is time to hold cryptocurrencies to the same standards as the traditional financial system.

The Bank of England Governor, Mark Carney, has again shared his comments on cryptocurrencies sighting various issues with the virtual currencies. He reckons that the cryptocurrencies have shown outstanding signals ending in a financial bubble. The governor says that regulators must protect the investors while at the same time cease illegal activities in the cryptocurrency market.

The Governor, did not, however, lobby for the ban of cryptocurrencies like Bitcoin. Although, he shared his concerns and encouraged regulations to take effect in the same way the traditional financial system operates. Similarly, Mark Carney, emphasized the virtual currency have no capability of replacing the traditional fiat currencies.

“Cryptocurrencies act as money, at best, only for some people and to a limited extent, and even then only in parallel with the traditional currencies of the users. The short answer is they are failing,” the governor said in a speech.

Speaking at an economics conference for Scottish students, Carney, who is also the head of the Financial Stability Board, earlier in the year shared his doubts in cryptocurrencies. He added:  

“Many cryptocurrencies have exhibited the classic hallmarks of bubbles including new paradigm justifications, broadening retail enthusiasm and extrapolative price expectations reliant in part on finding the greater fool,”

Furthermore, the Governor believes that cryptocurrencies only work for a few people but also to a limited extent in tandem with the fiat currencies. The supply of cryptocurrencies like Bitcoin is fixed; therefore, adoption of the currency will be biased and deflationary. At the same time, the virtual currencies are host to various consumers issues touching on criminal activities and money laundering.

“At present, crypto-assets raise a host of issues around consumer and investor protection, market integrity, money laundering, terrorism financing, tax evasion, and the circumvention of capital controls and international sanctions,” he said.

In his speech, Mark Carney said that now is the time to treat cryptocurrencies just like any other traditional currency and hold them to the same standards. He is keeping an open mind about the possibility of the Bank of England introducing its digital currency. However, this might not be in the short-term.

 

 

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