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Cryptocurrencies Are Failing as Money, Says BOE's Carney -- Update

2 Mar 2018 11:03 am
By Jason Douglas 

Cryptocurrencies are failing as money and should face tighter regulation, Bank of England Gov. Mark Carney said Friday.

Mr. Carney said "the time has come" to hold digital currencies and the exchanges on which they trade to the same standards as the rest of the financial sector.

"Being part of the financial system brings enormous privileges, but with them, great responsibilities," Mr. Carney said, according to a text of his speech prepared for a student conference in Edinburgh.

"In my view, holding crypto-asset exchanges to the same rigorous standards as those that trade securities would address a major underlap in the regulatory approach," he added.

His remarks come as regulators world-wide step up scrutiny and oversight of digital currencies. The U.S. Securities and Exchange Commission issued dozens of subpoenas and information requests to technology companies and advisers involved in the red-hot market for cryptocurrencies this week, The Wall Street Journal reported.

Mr. Carney, who also heads the Financial Stability Board, a global regulatory task force, said regulation of digital currencies is needed to combat money laundering and other illegal activities, as well as protect retail investors.

The FSB is due to publish a report on cryptocurrencies for the leaders of the world's largest economies later in March.

Mr. Carney said cryptocurrencies use interesting technology, including the much-vaunted distributed ledger technology that records transactions across users. But he said they are failing as money, given their wild swings in value and limited exchangeability for goods and services.

He said calls for central banks to borrow the technology and issue their own digital currencies to supplant cash and bank deposits are premature.

"A true, widely-available central bank digital currency does not appear to be a near-term prospect," Mr. Carney said.

The blockchain technology that underpins bitcoin still has shortcomings and it remains questionable whether central banks should play an even bigger role in the financial system, he said.

"A CBDC [central bank digital currency] shouldn't be a solution in search of a problem or an effort to of central bankers to be down with the kids," Mr. Carney added.

Write to Jason Douglas at jason.douglas@wsj.com

(END) Dow Jones Newswires

March 02, 2018 06:03 ET (11:03 GMT)

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