Price volatility remains cryptographic assets of being widely accepted as a means of payment, the Bank of Canada said on Thursday, although the rapidly evolving markets are an emerging vulnerability Canadathe financial system.
The central bank said it is overseeing the cryptocurrency markets, which have risen in popularity over the past year as they have been easier for consumers to access through publicly traded funds, listed companies and other investment.
Despite growing interest, cryptocurrencies like it bitcoin and other cryptocurrencies remain high-risk, as it is difficult to establish their intrinsic value, the Bank said in its annual review of Canada’s financial systems.
“Price volatility stemming from speculative demand remains a major obstacle to the widespread acceptance of cryptocurrencies as a means of payment,” he said.
Bitcoin, the largest and most popular cryptocurrency, rose nearly 14% on Thursday to $ 42,000, after falling 14% the day before, to a low since late January.
The Bank of Canada added that while cryptocurrency markets currently have no “systemic importance” in Canada, this could change if a major technology company issued a cryptocurrency that was widely accepted as a cryptocurrency. digital Payment method.
The Bank of Canada is currently developing its own central bank digital currency, similar to cash, which it could issue to the public, if needed. Many other major central banks are doing similar tasks.
Digital currency group Diem Association, formerly known as Facebook Inc.’s Libra project, said this month that it plans to launch a pilot of a stable U.S. dollar currency, though it did not say when.
Stables are backed by traditional assets and are a potential solution to the volatility of cryptocurrency asset prices, although they also carry risks, the central bank said.
“Unless the establishment funds are supported exclusively by Canadian dollars, their widespread adoption could inhibit the Bank’s ability to implement monetary policy and act as a lender of last resort,” he said.