Bank of England: Bitcoin is too small to threaten the Global Economy

Bank of England: Bitcoin is too small to threaten the Global Economy

Bitcoin recently surpassed the $10,000 mark to reach a new all-time high above $11,300, before the cryptocurrency’s price quickly fell back to $10,600 at press time, according to data from Cryptocompare. The cryptocurrency’s recent new heights led central bankers to comment on the cryptocurrency’s status.

United Kingdom central bank, Bank of England (BoE), deputy governor Sir Jon Cunliffe, speaking to BBC Radio, stated that the cryptocurrency is “too small to pose a risk to the global economy,” as he believes it isn’t even a currency due to the lack of a central bank behind it. To Sir Jon Cunliffe, the cryptocurrency is a commodity, and investors need to do their homework on it. He stated:

“This is not at a size where it’s a macroeconomic risk to the global economy, but when prices are moving like that, my view would be investors need to do their homework.”

Interestingly, last year, Bank of England deputy governor Ben Broadbent stated that digital currencies put banks at risk, by impairing their ability to issue credits. Per his words, digital currencies such as bitcoin won’t replace establish currencies such as the US dollar, the Pound, or the Euro. According to him:

“Almost always, these currency substitutions occur only once the existing currency has become deeply compromised. Even then, the thing people naturally reach for is an existing, trusted currency – often the US dollar – rather than some entirely new unit of account.”

Notably, past reports suggest the Bank of England has sought to create a digital currency of its own, a centralized, central-bank issued cryptocurrency dubbed “RSCoin.” The cryptocurrency was being developed by researchers at the University College in London, following direct suggestion from the central bank.

Various banks and other financial institutions have been commenting on bitcoin due to its incredible growth. Earlier this year, as covered by Core Media, JP Morgan’s chief executive, Jamie Dimon, stated that the cryptocurrency was a “fraud” and got a market abuse report filed against him after his bank was found buying the cryptocurrency, reportedly on behalf of its clients.

However, despite Dimon suggesting those who trade cryptocurrency are “stupid,” recent reports suggest JP Morgan is considering helping its clients bet on bitcoin’s price, through futures contracts to be offered by the CME Group in December. The bank would collect fees for the service.