Bank of Canada Governor Stephen Poloz ended 2017 and welcomed in the New Year by raising concerns about the rise of digital currencies such as Bitcoin.
In a year end speech delivered at the Canadian Club in Toronto, Governor Poloz singled out the rise in popularity of digital forms of currency, such as Bitcoin, as a troublesome trend that threatens to destabilize financial markets going forward. He went so far as to equate purchasing Bitcoin to gambling.
“What their true value is may be anyone's guess — perhaps the most one can says is that buying these things means buying risk, which makes it closer to gambling than investing,” said Governor Poloz when asked about the rapid rise in value of Bitcoin currency.
However, when pressed, Governor Poloz acknowledged that transactions using electronic payments are growing in Canada and around the world and the demand for electronic cash has prompted Canada’s central bank to consider the possibility of providing a form of digital currency itself in the future. Though he stressed that this idea was at the discussion stage only.
“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.
Governor Poloz also raised concerns about the continued rise in real estate values in Canada, as well as household debt levels, saying that the Canadian consumer is at risk on both fronts – sentiments he has expressed several times over the past six months.
“I offer this advice (to consumers),” said Governor Poloz. “Testing yourself to make sure you can handle your mortgage payments if interest rates were higher at renewal is a very good idea."
