Bitcoin recently saw its value surge after Bank of England (BoE) governor and head of the Financial Stability Board (FSB) Mark Carney wrote to G20 Finance Ministers and Central Bankers that cryptocurrencies “do not pose risks” to the world’s financial system.
Carney’s words came in a letter brought forth by Reuters. The letter claims the FSB doesn’t see cryptocurrencies as a threat to financial security, a day before the lawmakers met for the G20 summit in Argentina.
“The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time. This is in part because they are small relative to the financial system.”
The letter further notes that even at its peak, the cryptocurrency ecosystem’s value was still less than 1 percent of the global GDP. In comparison, Carney wrote, the 2008 financial crisis saw the value of credit default swaps reach 100 percent of the global GDP.
Furthermore, the central bank governor dismissed cryptocurrencies like bitcoin as legitimate substitutes for currency by stating that they have “very limited use for real economy and financial transactions,” which means their links to the rest of the financial system are limited.
The letter is line with Carney’s past observations. As covered by Core Media, the central bank governor has, in the past, stated that policymakers prefer the term “crypto assets” while referring to cryptocurrencies. That’s because, in their eyes, cryptos aren’t true currencies. Nevertheless, at the time, Carney called for a crackdown on cryptocurrencies.
Carney’s letter helped bitcoin surge
Shortly after Carney’s recent position on bitcoin and other cryptocurrencies was revealed, bitcoin’s price started surging. According to data from CryptoCompare, the flagship cryptocurrency surged as much as $1,000 shortly after the news broke. At press time, one bitcoin is currently trading at $8,404.
Mark Carney’s letter quickly helped the bulls win, as it may be a window into where the discussions around cryptocurrency regulations are headed at the G20 summit. Yet, Carney’s letter noted that various countries called for a unified response to speculation around the cryptocurrency ecosystem. Among them are Japan, France, and the US.
It added that the FSB will “identify metrics for enhanced monitoring of the financial stability risks” cryptocurrencies pose.