The Governor of Bank of Baroda has aid that he has lost his sleep due to the exposure surrounding the Bitcoin. He said that the popularity and publicity of Bitcoin make him await at night. U.S. Federal Reserve Chair Janet Yellen may not think that cryptocurrencies play much of a role in the economy.
Bitcoin ‘Keeping Me Awake at Night: Canadian Banking Chief
The Governor of Canada’s central bank, Stephen Poloz, told his attendees at the Canadian Club of Toronto, in an year-end speech titled “Three Things Keeping Me Awake at Night,” that three of his chief concerns heading into the new year are cyber threats, rising household debt due to the cost of housing, and the difficulties that younger Canadians face when trying to find employment.
Anyway, before concluding the speech, Poloz has submitted himself by saying that not only these reasons but also something else that has caused the loss of his sleep: “the noise I keep hearing about cryptocurrencies, especially Bitcoin.”
In true Festivus tradition, Poloz expressed his list of objections against bitcoin, beginning with the “misnomer” of calling it a cryptocurrency.
Poloz said that“To begin with basics, the term “cryptocurrency” is a misnomer—“crypto,” yes, but “currency,” no. For something to be considered a currency, it must act as a reliable store of value, and you should be able to spend it easily. These instruments possess neither of these characteristics, so they do not constitute “money.”
Further, he said that the cryptocurrencies are structurally more related to high-risk securities, although purchasing them is similar to gambling more than investing.
“So, what are cryptocurrencies, exactly? Characteristics vary widely but, generally speaking, they can be thought of as securities,” Poloz said. “What their true value is may be anyone’s guess—perhaps the most one can say is that buying these things means buying risk, which makes it closer to gambling than investing.”
Bank of Canada Researching Digital Currency
At last, he showed his doubt in the matter that any of the customers wanted to move outside the central banking system which provides consumers with “a vital public good.”
He again said that “It is often forgotten that the cash provided by a central bank is the only truly risk-free means of payment,” disregarding the apparent threats of counterfeiting and, in some countries, runaway hyperinflation.
Nonetheless, he admitted that, as the world is moving into the digital age, the desire for “digital cash” will continue to grow among the people. He implemented “strong arguments” that central banks, including the Bank of Canada, have to make a research how to suitable make the digital currency to meet this perceived need within the legacy financial system.
“All central banks are researching this,” he concluded.