BoE's Governor Carney Says Bitcoin Fails as a Substitute Currency

BoE's Governor Carney Says Bitcoin Fails as a Substitute Currency

February 20, 2018

Bank of England Governor Mark Carney sees fundamental problems with the concept of ‎Bitcoin as a viable currency when measured by ‎standard benchmarks.‎

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Responding to questions from students at London’s Regent’s University on Monday, ‎the BOE governor said that there are two big problems with bitcoin as a credible currency: its value is ‎unstable, and it can’t be a “useful way to buy things.”‎

The most important feature of a currency is to be a stable store of ‎value. Yet, the wild swings in the value of digital coins do not make it a more ‎plausible substitute currency, he added.‎

‎“It has pretty much failed thus far on … the traditional aspects of money. It is ‎not a store of value because it is all over the map. Nobody uses it as a ‎medium of exchange,” Carney said.‎

Carney repeated the BoE’s view that the blockchain technology that underpins bitcoin ‎and other virtual coins could improve the way transactions are conducted in a ‎decentralised way, which conceivably eliminates the hassle of exchanging ‎currencies and clearing the money through banks. But he highlighted, in ‎response to a question, the risks of rolling out such an approach across the entire ‎economy through a cryptocurrency intended for the public. ‎

Carney said before that bitcoin actually behaves more like an equity or a ‎speculative asset, though the systems underlying cryptocurrencies are an “active ‎area of interest.” Even so, the central bank is in no rush to embrace the new technology.‎

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