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Cryptocurrencies such as bitcoin are a gamble to Canada’s central bank chief.
Bank of Canada Governor Stephen Poloz, delivering his last speech of the year Thursday in Toronto, said currencies must act as a reliable store of value and should be able to be easily spent.
“What their true value is may be anyone’s guess -- perhaps the most one can say is that buying these things means buying risk, which makes it closer to gambling than investing,” Poloz said. “All I will say to people intending to buy a so-called cryptocurrency is that you should read the fine print and make sure you know what you are getting into.”
Do you agree with Stephen Poloz’s assertion that bitcoin is more of a gamble than an investment?
Poloz acknowledged demand for digital cash could grow over time and policy makers are studying whether a case could be made for central banks to provide it.
“Bank staff are exploring the circumstances under which it might be appropriate for the central bank to issue its own digital currency for retail transactions,” he said.
At a later press conference, Poloz said the central bank’s own experiments with blockchain technology suggest it doesn’t have “substantial advantages” over the current technology for payment systems.
The frenzy surrounding cryptocurrencies is a “situation that has the ingredients of something that could be a significant disturbance” to the financial system, Poloz said, adding he hopes the system will treat bitcoin cautiously.
The charts on the price of bitcoin “looks like the left-hand side of the Eiffel Tower, doesn’t it,” he said, comparing it to the bubble in technology stocks almost 20 years ago. “You don’t see that very often.”
The level of hype around this is “quite extraordinary” he said, and he’s getting asked about it a lot.