The opinions of financial institutes regarding crypto market and its development are largely diverse. While some of the financial inst. are optimistic about it, some indicate extreme skepticism about it. The negative stance over cryptos might be perhaps due to the market’s volatility and traction.
Huw van Steenis, the senior adviser to Bank of England’s (BOE) Governor Mark Carney, spoke to Bloomberg at the Davos meet regarding cryptocurrencies. He also discussed the inception of Bitcoin, during the 2008 financial crisis. When asked if he sees crypto’s potential as a threat to economic stability, he firmly expressed that he was not at all worried about cryptocurrencies. He noted, “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.” van Steenis also revealed that across the world, banks spend only 25 percent of the total budget for digital transactions.
He believes that a huge challenge for the BOE will be to form regulations for new entrants to the banking system, especially from technology firms. He added that legacy financial institutions are consistently on their toes when it comes to maintaining their competitive edge and market share. But, bitcoin or any other crypto is not a viable challenge to the big banks, according to him. Van Steenis noted that “Traditional banks are trying to fend off the threats from these new tech platforms,” adding, “But cryptocurrencies aren’t high on my worry list.”
In this talk, he was also asked about the similarity between banks and Bitcoin regarding volatility. He marked that customers require cheaper, faster and better services. He stated, “What I love when meeting with Fintechs is their obsession with customers. The challenge is will they get customers before the traditional banks can innovate.”
Notably, he said that his top priority is to make sure that the United Kingdom develops as a “vibrant center” for fintech in the next five to 10 years. Van Steenis also noted that the magnitude of the market crash was astonishing and was the right opportunity for FinTech to rise.
Here, van Steenis’s approach towards crypto assets is quite negative, as he considers that cryptos lack value.