Friday, July 19, 2019

Bank of England’s Senior Adviser Says Cryptocurrencies Lack Value and are Slower

Huw van Steenis, the Senior Adviser to Bank of England’s (BOE) Governor, Mark Carney, said cryptocurrencies fail the basic financial test. Steenis, in an interview with Bloomberg on January 21 also added that virtual currencies lack value and are slower. Therefore, he does not see them as a threat to economic stability.

Cryptocurrencies Have Not Passed the Basic Financial Services Test

Per the report, Huw van Steenis was questioned in an interview with Bloomberg in Davos, Switzerland, if cryptocurrencies are a threat to economic stability. According to him, he is not worried about these digital assets since they come with their limitations. He added that they had not passed the basic financial services test.

Huw van Steenis also said:

They’re not a great unit of exchange, they don’t hold value, and they’re slower.

Traditional Banks are Slow in Adopting Modern Technologies

Asides targeting virtual currencies, the Senior Adviser also pointed out that traditional banks are not fast in adopting modern technologies. On the other hand, Fintech firms have the obsession to get new customers. However, “will they get customers before the traditional banks can innovate.”, says Steenis.

In September, Steenis made a publication on The Financial Times whose views on cryptocurrency can be likened to the recent one. Here, he had outlined that Bitcoin has failed the innovation test which he attributed to some reasons. Some of these are, is it cheaper, faster, and what are its side effects.

Steenis Says Bitcoin Transactions are Slower than VISA

The publication further states that Bitcoin is slower in comparison to VISA which Steenis says can handle about 24,000 transactions per second (TPS). In the same vein, another factor he considers to be the downside of the virtual asset is its high energy consumption during mining. Comparisons were also made with finance which he believes is sustainable.

Related Article:  Cryptocurrency Will Never Substitute Central Bank's Currency, Romanian Central Bank Official Says

While the Senior Adviser’s view is similar to that of Gary Shilling, cryptocurrency experts may be quick to counter his opinion. Thomas Lee, Fundstrat Global Advisors Managing Partner, predicted in November that Bitcoin would remain relevant. Weiss Ratings also forecasted that Bitcoin would continue to be a store of value.

BTCNN on January 21 reported of Max Keiser, host of the Keiser Report who said that Bitcoin would be the next global reserve currency. Keiser backed this up by pointing out that this digital asset has certain features which cannot be found in fiat.

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