Bank of Canada Sees Speculative Mania in Recent Crypto Bull Run
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10 February
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The recent spike of cryptocurrencies prices is likely driven by a speculative mania, rather than a trend, Timothy Lane, Deputy Governor of the Bank of Canada, said in his speech to Montreal's Institute for Data Valorization. While Lane admits some cryptocurrencies could see "a boost from the acceleration of digitalization," the majority of digital assets like bitcoin (EXANTE: Bitcoin) will not become "the money of the future."

"The recent spike in their prices looks less like a trend and more like a speculative mania—an atmosphere in which one high-profile tweet is enough to trigger a sudden jump in price," Lane added.

In the meantime, the global adoption of stablecoins is possible. However, none of the current models is near that point yet, Lane highlights.

"Because in most cases they are partly or fully backed by safe assets, their purchasing power is designed to be more stable," the Deputy Governor of the Bank of Canada noted.

Lane also mentioned a Canadian central bank digital currency. According to him, the regulator is currently studying the potential business model for the digital currency. In October 2020, the Bank of Canada called for a global approach on central bank digital currencies (CBDC) with G7 partners.

Bank of Canada: CBDC Should be as Accessible as Cash

The Bank of Canada Governor Tiff Macklem said the globally coordinated approach is needed in order "to prevent surprises" and to keep such tools from being used by bad actors.

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