When a lot of governments are banning Bitcoin as they consider that the digital currency is illegal and may cause instability in their economies, the statement from an official from the Bank of Canada has come that says that it is not a concern at least for now. The top official from the national bank said electronic money does not currently pose a risk to stability in Canada.
It has come out that the bank official is Senior Deputy Governor Carolyn Wilkins. She outlined the risks that e-currencies can pose to consumers, such as a lack of recourse if money is lost or stolen or if an exchange fails, as in the high-profile case of Mt. Gox earlier this year. However, it looks for now, she is not bothered much about Bitcoin’s disturbing role.
Talking to media professionals the official gave her opinion wherein she admitted that the evolution of cryptocurrencies such as Bitcoin bears close watching for any threats to the financial system that could arise from more widespread use. However, according to her electronic money does not currently pose a risk to stability in Canada.
Wilkins believes that there could also be ramifications for the central bank if e-money were to gain more widespread acceptance since changes in the benchmark interest rate would have less effect on a system that uses cryptocurrencies alongside the Canadian dollar. Canada was the first country that had got the first Bitcoin ATM at Vancouver.
Bitcoin is not a Reliable Investment Option
Though Bitcoin is popular in Canada, Wilkins believes that in the unlikely situation in which cryptocurrencies were used broadly, a significant proportion of economic transactions would not be denominated in Canadian dollars. Putting her views at Waterloo, Ontario, she said this would reduce the bank’s ability to influence macroeconomic activity through Canadian interest rates.
However, she clarified it that Canada is nowhere near that point that it can be alarming. She believes that as money and payment technologies progress, the Bank of Canada is helping the federal government modernize oversight frameworks. According to her the central bank is also undertaking research on the merits of issuing e-money.
Wilkins said Bitcoin was not a reliable store of value, as its worth soared from pennies to more than $1,100 and then fell back to $300 in just four years.
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