What’s Going On?
Bank of England Governor Mark Carney gave a highly balanced view on the current state of crypto-currencies to Bloomberg Television on March 2.
Why Does It Matter?
What Mark Carney says in public has more effect on attitudes towards crypto-currencies than almost anyone on the planet.
He is not only the Bank of England Governor, but also head of the international Financial Stability Board. The balanced view he showed on Bloomberg Television shows that while he is unimpressed by the functioning of current crypt-markets, he is not a hawk looking to have them banned. He said that while currencies like Bitcoin are not functioning as they should be, “it does point the way in many respects to the future of money”. Carney has been calling for the regulation of crypto-currencies.
Why Does Carney Think Bitcoin Has ‘Largely Failed’?
He said: “Firstly, is it a store of value? Is it reliable? Does it hold a stable value? Clearly anyone who looks at the volatility: Bitcoin is 10 times more volatile than sterling. It is not a stable hold of value. But I think the most important thing is [is it] actually working as medium of exchange: How well can you use it to buy goods. It is not that efficient. For example, it costs about one and a half pence to use cash. Eight pence to use a debit card in the UK, swipe cards, your iPhone. It costs about two pounds to use Bitcoin on a transaction basis. You layer on top of that the environmental costs and other factors – it is just not that good at doing what it is supposed to do. But it does point the way, in many respects, to the future of money. And that is what is interesting. It is a ‘glass half empty’. We are not worried about it displacing sterling or the U.S. dollar or other conventional currencies – fiat money. But these crypto-currencies throw a challenge to central banks and those who oversee payment systems and markets of how to re-organize those to better serve customers.”