MNI: BOE Carney: No Crypto-Asset Stblty Risk; Need Regulating

By David Robinson

     LONDON (MNI) - Bank of England Governor Mark Carney said Friday that so

called cryptocurrencies, which are best viewed as crypto-assets, do not

currently pose a threat to financial stability.

     Carney, in a speech to the Scottish Economic Society, said that he did not

favour trying to outlaw crypto-assets. Instead, he favoured ensuring that they

were on the same level regulatory field as other financial assets.

     Central banks have to decide whether "to isolate, regulate or integrate

crypto-assets" and the activities linked to them, Carney said. 

     He opposed isolation and favoured regulation, integrating them into the

financial system. 

     Cryptocurrencies such as Bitcoin have performed very poorly on the standard

measures for currencies, as stores of value and mediums of exchange. They cannot

be used for the vast majority of purchases and suffer from extreme price

volatility.

     As they are not useful for most transactions they are better viewed as

speculative assets.

     "Over the past five years, the daily standard deviation of Bitcoin was ten

times that of sterling," Carney noted.

     Carney argued that crypto-assets do not pose a clear and present danger to

the financial system. The BOE's Financial Policy Committee is looking into the

risks posed by them and internationally the Financial Stability Board (FSB)is

doing the same.

     "In my view, crypto-assets do not appear to pose material risks to

financial stability," Carney said.

     But crypt-assets trading and investment does need be regulated like other

financial sector .

     "The time has come to hold the crypto-asset ecosystem to the same standards

as the rest of the financial system ... the EU and the US are requiring crypto

exchanges to meet the same anti-money laundering and counter the financing of

terrorism standards as other financial institutions," Carney said.

     He left the door open to official digital currencies in the future, the

creation of a central bank digital currency, but he said this was not realistic

in the near term.

     Carney's speech made no reference to the current monetary policy

conjuncture.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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