Carney: UK central bank digital currency not likely in short term

Dianna Christensen
March 3, 2018

He did not call for a ban, saying cryptocurrencies did not pose a risk to the financial system and instead they should be brought into the net of regulation.

Thus far, rather than a sober assessment of their future prospects, the prices of many cryptocurrencies have exhibited all the classic hallmarks of bubbles, including new paradigm justifications, broadening retail enthusiasm, and extrapolative price expectations reliant in part on finding the greater fool.

Carney said greater regulation of cryptocurrencies is needed.

Authorities in both the USA and European Union have instituted plans to apply anti-money laundering standards and anti-terrorism financing standards to cryptocurrencies in the same way that they do to other financial services products and it now looks like their counterparts in the United Kingdom are to follow suit.

The Bank of England's Financial Policy Committee is now considering the risks posed to United Kingdom financial stability by the proliferation of cryptocurrencies. The price of Bitcoin soared at the end of last year, rising nearly six-fold in the last three months of the year. As for the crypto-industry, he asserts that regulation is necessary and will mean that the best cryptocurrencies will be drawn to properly regulated exchanges, and weaker ones will, in turn, fall to the side.

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Canadian economist and Bank of England Governor Mark Carney unsurprisingly continued his anti-Bitcoin and anti-cryptocurrency rhetoric this morning in a speech to Bloomberg - in which he threw about as much FUD (Fear, Uncertainty and Doubt) as one in his position can possibly throw.

Carney, who heads the G20 Financial Stability Board (FSB), a global rule-making body, expressed doubts about cryptocurrencies earlier this year and his speech, intended for a Scottish student economics conference, expanded on these. He said the time had come to "regulate elements of the crypto-asset ecosystem to combat illicit activities".

Backers of bitcoin have said the underlying technology has potential to revolutionise the financial system and make everyday payments easier and cheaper.

Digital currencies can allow anonymous transactions and carry risks including money laundering, terrorism financing and tax evasion. Many investors in crypto-currencies were from a generation that did not have first-hand experience of the 2008 financial crisis, he added.

The Bank chief also conceded that the distributed ledger technology which underpins cryptocurrencies can act to help the way payments are made evolve.

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