Crypto not a threat to financial system according to Bank of Canada

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Perhaps due to the fact that the country is one of the most friendly towards digital assets, and given that there has been a large adoption rate in recent years, it would appear Canada does not feel threatened about the impact that Bitcoin could have on the financial system.

According to the Bank of Canada deputy governor, Paul Beaudry, the number one cryptocurrency in the world currently does not appear to have raised any concerns, nor is it believed to pose a significant risk to the country’s economy.

Speaking at the Ontario Securities Commission Dialogue 2021 event where he was discussing the risks that could be associated with Bitcoin and the stability impact it may have on the financial system of a country, Beaudry remained as upbeat as ever.

He stated that the Bank of Canada did not believe the crypto coin was “developing in a way that creates a systemic type of risk for a financial system” and that they are “quite removed from a financial system”, thus suggesting that there is no real risk to them.

Canada is one of the most crypto-friendly nations

As mentioned, Canada is one of the most friendly nations in the world currently towards digital assets, with the North American country establishing itself as a leader in the global digital asset industry in 2014 when the Canadian Parliament became the first government in the world to pass a national law on virtual currencies.

In relation to the regulation that has already been passed and the likelihood that further regulations will be passed in the future, Canada has become a highly popular destination for crypto miners, with the country being ranked as the fourth-largest in regard to hash rate according to the Cambridge Bitcoin Electricity Consumption Index as of August 2021.

Moreover, the rate of adoption of cryptocurrency has increased as many have decided to use a crypto casino in Canada more recently due to the benefits that they recieve when wagering online. Gamblers have noticed that they are able to enjoy a number of advantages that have each enhanced the overall activity and have provided a positive gambling experience that they can fully enjoy.

Keeping a close eye but Bank of Canada does not see Bitcoin as a big risk for the economy

When pushed on the fact that crypto adoption has increased and that the risks associated with digital assets will also increase, Beaudry did state that whilst the Bank of Canada was not looking at it as a big risk, they would be keeping a close eye on what happens in the future.

“We’re not at the point yet of thinking this a big risk for the economy but this is something we’re keeping an eye on very closely,” he stated.

He also highlighted that investors had actually been typically buying digital assets “mainly to speculate”, whilst the traditional forms of crypto including Bitcoin did not play a role in payments. Nonetheless, he admitted that the rise of stablecoins is “something we’re also keeping an eye on” due to the widespread idea that they will likely play a bigger role in payments in the future.

Scepticism still exists

Perhaps surprisingly given the country’s stance as one of the world’s most-friendly nations towards cryptocurrency, it would seem there is some scepticism regarding digital currency. In May, the Bank of Canada had announced that digital assets continued to remain a highly risky asset and wrote the following in its recent financial system review: “Price volatility stemming from speculative demand remains an important obstacle to the wide acceptance of crypto assets as a means of payment”.

Nonetheless, observers will suggest that Canada should continue to embrace digital assets even more in the future as the widespread adoption throughout the world and the likelihood that more countries will introduce stricter regulations could make the North American nation one that is highly favourable to miners, investors and individuals who hold crypto.

Conclusion

Despite the scepticism that is held by the Bank of Canada, they clearly do not appear to be too concerned by the popularity that Bitcoin has managed to achieve recently and do not believe it will have an impact on the country’s financial system, although Beaudry did advise they would be keeping a check on it.