Cryptocurrency Poses No Significant Danger To The Economy - Bank of Canada.

Cryptocurrency Poses No Significant Danger To The Economy - Bank of Canada.

2021-11-26 | Eddy Morgan

Cryptocurrency Poses No Significant Danger To The Economy - Bank of Canada.

Canada is the 4th hash rate country and one of the first countries to approve a Bitcoin ETF. At their current level of use, cryptocurrencies such as Bitcoin (BTC) do not pose a significant threat to the financial system, according to Bank of Canada deputy governor Paul Beaudry. On Tuesday, Beaudry spoke at the Ontario Securities Commission Dialogue 2021 on the threats to the stability of the Canadian financial system. When asked if cryptocurrencies are a problem, the deputy governor responded that the Bank of Canada does not believe bitcoin is now "expanding in a way that offers a systemic type of danger for a financial system." This is the case because cryptocurrencies are "quite far apart from a banking system," as Beaudry pointed out. Traditional cryptocurrencies, such as Bitcoin, do not play a significant part in payments, according to Beaudry, because investors acquire BTC "mostly to speculate." However, he believes that digital assets such as stablecoins, which are backed by assets and fiat currencies, might play a larger role in payments. "We're keeping an eye on it as well," Beaudry added. After being one of the first jurisdictions to approve a Bitcoin exchange-traded fund, Canada has positioned itself as one of the most crypto-friendly countries in the world. Canada was the fourth-largest nation in terms of the hash rate as of August 2021, according to the Cambridge Bitcoin Electricity Consumption Index. Despite the rapid growth and use of cryptocurrency, the Bank of Canada has previously voiced caution about it. Despite institutional investors' acceptance, Canada's central bank stated in May that digital assets such as Bitcoin remain a high-risk asset. The Bank of Canada noted in its financial system assessment on the most serious financial risks and economic vulnerabilities that "price volatility resulting from speculative demand remains a key impediment to the mainstream acceptance of crypto assets as a method of payment."

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