Economist casts doubts over future of ‘crypto currencies’
BITCOIN and other ‘crypto currencies’ do not meet the essential requirements of monetary value and may well be outlawed in the future, a visiting economist has suggested.
Last month the value of Bitcoin dropped below $10,000, 50% below its peak in December.
John Greenwood, chief economist at Invesco, described the Bitcoin phenomenon as ‘pure speculation’, being highly volatile and not a stable unit of accounting.
Asked for his views on the currency following an economic outlook event held at the Pomme d’Or Hotel, he said that apart from being targeted by hackers, Bitcoin had already been squashed by the authorities in China and Korea and that it was ‘more likely that it would be outlawed going forward’.
Mr Greenwood, a member of the Committee on Currency Board Operations of the Hong Kong Monetary Authority and also a member of the UK Shadow Monetary Policy Committee, said: ‘Financial centres like London, Zurich, Hong Kong, New York, have huge settlement processes between the banks, with business transactions being carried out daily at minimum cost.
‘There is no way that Bitcoin can match it.
‘Until a digital currency can do that, there is no possibility of competing with the traditional currencies.’
Earlier, reviewing the global economy, he described the outlook as ‘quite optimistic, but slightly more bumpy than 2017’, with the stock market still rising and several more years of expansion to come in the current business cycle.
A year on since Donald Trump was inaugurated in the United States, he said the president had had a mixed record so far, with immigration still being disputed in the courts and the repeal of Obamacare a failure.
‘The stock market has little to do with Donald Trump’s presidency,’ said Mr Greenood. ‘Donald Trump inherited a favourable position and he’s a lucky president.’
The eurozone had seen year on year growth of 2.5%, although people were wary about inflation picking up. ‘I do not think that is likely,’ Mr Greenwood said. ‘Inflation is part of the business cycle. Fiscal policy and budget deficits do not cause inflation, nor do wages.’
In terms of the UK, the economy was performing much as expected, with exports having picked up and orders the strongest since 1990.
‘I think people have been too pessimistic about Brexit and what makes the UK competitive – our markets and the flexible workforce,’ he said, adding: ‘The UK is doing better than the eurozone and will continue to do well.’