Bank of England (BoE) governor Mark Carney called for the authorities to regulate cryptocurrencies rather than “ban them outright” in his speech to the inaugural Scottish Economics Conference in Edinburgh on March 2, as reported by Financial Times.
According to Carney, cryptocurrencies do not threaten “financial stability” at the moment, but they could after more consumers get involved. Carney believes that it is time to incorporate the cryptocurrency ecosystem into the rest of the financial system, applying to it the same regulatory approach and the same “rigorous standards”.
Carney believes that this would not only minimize money-laundering and consumer risks, but also help adapt the technology for wider public use.
Following his recent speech at London’s Regent's University, where Carney argued that Bitcoin has “failed” as a currency, the central bank’s governor again emphasized his opinion that digital currencies like Bitcoin should actually be regarded as assets.
Carney pointed out the tremendous volatility of these “assets,” stressing that cryptocurrencies have “exhibited classic hallmarks of bubbles” since their prices are based on “beliefs regarding their future supply and demand”, and do not have “intrinsic value” or external backing.
BoE governor expressed his view of the cryptocurrency market as “quite a lottery.”
“Consider that if you had taken out a £1,000 student loan in Bitcoin in last December to pay your sterling living costs for next year, you’d be short about £500 right now. If you’d done the same last September, you’d be ahead by £2,000. That’s quite a lottery,” Carney said.
Carney’s allegations come after the UK’s Treasury Select Committee announced that it will launch an inquiry into cryptocurrencies and their effects on the UK investors and businesses. The purpose of this inquiry is to explore the risks and benefits of digital currencies and Blockchain technology.