Mark Carney: Cryptocurrencies Do Not Pose Serious Risks
When it comes to bitcoin and cryptocurrencies, Mark Carney, governor of the Bank of England and chairman of the Financial Stability Board (FSB), is known for being a harsh critic. Though Carney has praised the technology behind cryptocurrency in the past, he has often referred to digital money as a “bubble,” claiming it has failed users and is “no substitute for cash” or credit cards.
“The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system,” Carney told CNBC in early March 2018, further stating that the “average volatility of the top ten cryptocurrencies by market capitalization was more than 25 times that of the U.S. equities market in 2017.”
Just days ago, Carney proclaimed that illicit activities surrounding cryptocurrencies were causes for major concern, citing everything from personal wallet thefts to terrorist funding, only now, it appears his sentiment has suddenly changed.
Less than 24 hours before he was scheduled to speak at this year’s G20 meeting, Carney seemingly reversed his stance on digital currencies, saying that they did not pose serious risks to financial stability. Carney and the Board published an official letter on March 18, the eve of the summit, stating:
“The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time … Their small size, and the fact that they are not substitutes for currency and with very limited use for real economy and financial transactions, has meant the linkages to the rest of the financial system are limited.”
Carney, whose term with the Bank of England ends in 2019, also insinuated that whoever succeeds him in the position is likely to run a more “open” operation, concentrating more on reviewing current rules and regulations, rather than implementing more strenuous standards.
“As its work to fix the fault lines that caused the financial crisis closes, the FSB is increasingly pivoting away from design of new policy initiatives toward dynamic implementation and rigorous evaluation of the effects of the agreed G20 reforms,” he said.
The G20 summit began on March 19, 2018, and will last through March 21. Several economic leaders are gathering in Buenos Aires to discuss cryptocurrencies and the future of the planet’s financial infrastructure.
Despite Carney’s newfound attitude toward digital assets, not every nation agrees that cryptocurrencies aren’t hazardous. Some countries, like France, Germany and Japan, are calling for further regulation, with the Central Bank of Germany stating that bitcoin should be regulated on a “global scale.” France and Germany are allegedly creating a joint proposal for cryptocurrency regulation that representatives will present at this year’s summit.
Carney, himself, explained that while he is pursuing a more “balanced approach” toward cryptocurrencies, the financial system will likely mold and change as more is understood about them:
“The market continues to evolve rapidly, and this initial assessment could change if crypto-assets were to become significantly more widely used or interconnected with the core of the regulated financial system.”
Still, it seems most virtual currency advocates have something to celebrate since, aside from his more lenient stance on coins themselves, Carney feels that the technology behind cryptocurrency has the potential to enhance and assist the economy as needed.