Cryptocurrencies Are Failing, Carry Classic Signs Of Bubbles, BoE's Carney Warns

Bank of England governor says cryptocurrencies are failing

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Although he was very critical of cryptocurrencies, he described the blockchain technology they use as "exciting and interesting". "The short answer is they are failing", Carney said in a speech. "Being part of the financial system brings enormous privileges, but with them great responsibilities".

There have been a number of high profile fluctuations in the price of cryptocurrencies over the last six months, most notably in bitcoin where prices fluctuated from a high of $20,000 in December 2017 bottoming out at $8,000 at the end of February.

Carney, who is additionally chair of the G20's financial stability board, joins a series of global policy makers to either flag serious concerns about crypto trading or in the case of China, ban it outright.

Carney confirmed that United Kingdom watchdogs wanted to ensure financial firms active in the market for crypto assets, including specialist exchange groups, were held to the same regulatory standards as others.

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

The inquiry will assess how the government and financial services regulators such as the Financial Conduct Authority (FCA) and the Bank of England can create an environment to protect consumers, without holding back innovation.

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. "Anarchy may reign on the dark web, but in the United Kingdom it's just a song that your parents used to listen to", Carney said, in a speech which will be seen as a major intervention by a top global regulator.

But in terms of regulation, "if there's a will there's a way", Mr Carney said.

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Carney said that approach risked stifling potentially big opportunities to streamline payments systems, making it easier for example for people in a pub to split the cost of a round of drinks without involving the traditional banking system.

"Cryptocurrencies are proving poor short-term stores of value", he said.

"Even if the current generation is not the answer, it is throwing down the gauntlet to the existing payment systems".

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