Bank of Canada Governor: Bitcoin ‘keeps me up at night’

Rage Commentary : In his year-end report, the Governor of Canada mentioned three issues that kept him awake, including cybersecurity, youth employment, and household debt. He also specifically mentioned that cryptocurrency is another issue that worries him. He believes that cryptocurrency is not a currency, and that buying it is purely speculative, and that its value is unknown. Moreover, the currency provided by the central bank is the best means of hedging. Of course, the demand for digital currency will continue to increase, so it is necessary for the central bank to conduct in-depth research on how to use this new thing correctly.

Translation: Annie_Xu

Federal Reserve Chair Janet Yellen may not think cryptocurrencies have a big role to play in the economy, but the Bank of Canada governor says bitcoin hype keeps him up at night.

Bitcoin ‘keeps me up at night’

In his year-end speech, "Three Things Keeping Me Awake at Night," Bank of Canada Governor Stephen Poloz told attendees at the Canadian Club of Toronto that his three biggest concerns for the new year are cyber threats, rising household debt due to housing costs, and the difficulty younger Canadians face finding jobs.

Before wrapping up his speech, however, Poloz admitted that there was something else keeping him awake at night: “I kept hearing about cryptocurrencies, especially Bitcoin.”

During the Festivus festival, Poloz expressed his displeasure with Bitcoin, beginning with the “misnomer” of the cryptocurrency.

"Starting with the basics, the term 'cryptocurrency' is a misnomer. 'Crypto' is right, but 'currency' is wrong. For something to be considered money, it must be a reliable store of value, and you must be able to spend it easily. These instruments do not have either of those characteristics, so they do not constitute 'currency'."

He said cryptocurrencies are structurally more like high-risk securities, although buying them is more like gambling than investing.

"So, what exactly are cryptocurrencies? The characteristics vary greatly, but in general, they can all be considered securities." "Their true value may be anyone's guess, but perhaps the most certain thing is that buying them is equivalent to buying risk, making it closer to gambling than investment."

Bank of Canada studies digital currency

Finally, Poloz expressed confusion about why some people want to move away from the central banking system, which provides consumers with "overwhelming public benefits."

He said:

“Remember that central bank-provided cash is the only truly risk-free form of payment,” while ignoring the significant threats of counterfeit currency and hyperinflation in some countries.

However, Poloz acknowledged that as the world moves deeper into the digital age, the demand for “digital cash” will continue to increase, creating a “strong argument” that central banks (including the Bank of Canada) must study how to appropriately use digital currencies within the traditional financial system to meet these expected demands.

"All central banks are looking at this issue."