Cryptocurrencies are not a risk to the economy, but we are following this market closely, said Paul Beaudry, vice president of the Central Bank of Canada (BoC), in answering a question about cryptocurrencies at an online event (Video Below).
Although the event was focused on real estate in Canada, the subject of cryptocurrencies came up when some participants questioned about crypto.
Beaudry also distinguished between Bitcoin and stable coins. According to Beaudry, stable coins can be beneficial because they are backed by fiat currencies like the Dollar, Euro. While for him Bitcoin is not a currency. He also claims that the central bank digital currencies (CBDC) can play a more substantial role in the economy.
The Central Bank of Canada maintains its position, bitcoin is not currency.
When asked whether cryptocurrencies are a risk and what is their relevance, the deputy governor of the Central Bank of Canada reinforced the opinion already given by the BoC earlier this month, that Bitcoin is not a digital currency and Canada has no intentions of any kind to make BTC legal tender.
Furthermore, Beaudry also said that crypto like Bitcoin are not directly linked to the financial system so they are not a major risk to financial system stability at this time but he pointed out that as they grow, they might become a problem in the future as crypto interest is growing fast and more people are investing in them.
“We’re not yet at a time where we think cryptocurrencies are creating a big risk to the economy, but it’s something we’re following very closely, very closely.”
Beaudry praises stable coins saying:
“Stablecoins, which are not like Bitcoin and are backed by real assets like Dollar, they have the potential to play a bigger role in payments and that’s also something we’re looking at.”
Despite BTC having gained a lot of adoption this year with more and more people interested in receiving their salaries in BTC, including some US city mayors. The vice president of the BoC reiterated that cryptocurrencies are purely speculative assets and that they do not play the role of money in the economy.
“ Most cryptocurrencies are sold as an idea that they are widely used as payments but they don’t have that payment role. Most of them are much more focused on the speculative part, where people buy mainly to speculate. We don’t see them being used as much as a means of payment right now.”
Beaudry’s speech makes it clear that if Bitcoin continues to grow, The Canadian bank will be ready to try to curb its adoption.