While crypto enthusiasts strongly believe in the potential of crypto assets to replace traditional units of exchange despite the market’s high volatility and lack of stability, supporters of traditional financial systems say that crypto assets have no chance.
Nevertheless, it doesn’t mean that Bitcoin and other cryptocurrencies do not attract the public’s attention anymore. Still, they are being widely discussed by a lot of prominent members of established institutions and Huw van Steenis, the senior adviser to Bank of England Governor Mark Carney, is one of them.
No Worries about Cryptocurrencies
Speaking about the prospects of the financial system on the sidelines of the 2019 World Economic Forum in Davos, Switzerland, Van Steenis noted that today many banking institutions are losing their heads trying to win the competition with the emerging technology, but in his opinion it’s absolutely senseless to worry even about the major cryptocurrencies without speaking about the smallest ones.
He explained that in his opinion digital assets could not compete with the traditional systems. He said:
“I’m not so worried about cryptocurrencies. They fail the basic tests of financial services. They’re not a great unit of exchange, they don’t hold value, and they’re slower. One of the biggest challenges for the BOE will be how to regulate new entrants to the banking system, particularly from technology firms.”
Nevertheless, according to Van Steenis, fintech companies have a real obsession with their customers, they listen to them and try to give them what they want. And as for services, it is quite obvious that customers want them to be cheaper, faster and more effective and digital services providers are actively working in this direction.
The task for traditional banks is to manage to innovate timely and to get their customers. Van Steenis also said that one of the main goals for the United Kingdom is to become “vibrant center” for fintech in the following 5-10 years.
No Threat to Financial Stability
In March 2018, Mark Carney, who is the governor of the Bank of England, stated that cryptocurrencies don’t pose a threat to global financial stability.
In his opinion, the innovative crypto technologies could be even used to boost the development of the global economy and to enhance the effectiveness of the financial system in case they are implemented in a proper way.
Carney’s assessment was based on the fact that despite the entire hype around crypto assets, in reality, they were very small relative to the financial system. Even when they were at their peak, their combining market value amounted to less than 1% of the world’s combining GDP.
UK and Crypto
But it’s also worth mentioning that while some prominent figures in the financial industry do not take cryptocurrencies seriously, some members of the UK government want to support the mass adoption of digital assets.
For example, Eddie Hughes proposed to allow UK residents to pay their local taxes and utility bills using Bitcoin.