Vice President of the Central Bank of Canada Paul Baudry believes that digital assets do not pose a serious risk to the economy, but the regulator is closely monitoring their development.
In his talk on real estate in Canada, Paul Beaudry touched on the topic of cryptocurrencies. In his opinion, there is nothing wrong with stablecoins, since they are backed by fiat currencies and real assets. Stable cryptocurrencies have a lot of potential that can be used to make payments.
The idea behind most cryptocurrencies is that they can be widely used for payments, Baudry said. But in reality, cryptocurrencies do not fulfill this task, since they are speculative assets with a high level of volatility. Bitcoin and other cryptoassets cannot play the role of regular money, Baudry said. Therefore, Canada does not consider the possibility of legalizing bitcoin as a means of payment, as El Salvador did.
In May, the regulator called cryptocurrency investments risky. Now Baudry believes that Bitcoin does not threaten the stability of the financial system, since it is not directly related to it. However, as they develop, cryptocurrencies can become a real problem in the future, as more and more people are investing in them.
“Today, digital assets do not yet pose great risks to the economy, but we are closely monitoring the development of this industry,” Baudry said.
As for central bank digital currencies, Baudry believes they could become an important part of the economy. Although in October, Bank of Canada Deputy Governor Timothy Lane announced that the central bank would not launch its own digital currency unless urgently needed.