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Bitcoin not big enough to threaten world economy
November 30, 2017
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LONDON: Bitcoin is not at a size where it would pose a risk to the global economy, Bank of England Deputy Governor Jon Cunliffe said on Wednesday, as the virtual currency soared to a record high above $10,000 on major exchange.

The cryptocurrency has climbed 10-fold so far this year, the largest gain of all asset classes and prompting sceptics to warn it is a classic speculative bubble.

“I would just say investors kind of need to do their homework,” Cunliffe said. He said he did not think British households as a whole were going on a “debt-fuelled binge” but added that fast rates of consumer credit growth needed to be watched.

Cunliffe was in the minority of officials to vote against a rise in interest rates that took place earlier this month.

Asked why in a separate BBC radio interview, Cunliffe said that although he agreed with his colleagues that Britain’s potential rate of economic growth had slowed since the financial crisis, he wanted to see more sign of inflation pressure.

“My view was given the disappointments we’ve had about pay increases and domestic cost pressures over recent years, we should wait to see those before raising rates.”

Away from the main markets, bitcoin’s vertiginous ascent showed no signs of abating, with the cryptocurrency soaring to another record high just a few per cent away from $10,000 after gaining more than a fifth in value over the past three days alone.

European shares inched higher, reversing earlier weakness as financials gained ground amid fresh dealmaking activity.

But those gains were not enough to pull up the MSCI world equity index, which tracks shares in 47 countries. The index was down 0.1 per cent on the day.

In Asian trading, Shanghai shares fell 0.9 per cent to a three-month low, having already been on a shaky footing due to a rout in the domestic bond market and fresh moves to reduce risks in the asset management industry that may bring a sea change for banks.

“The Chinese stock market drop is reminiscent of the selloff that we saw in the summer of 2015, and that is causing some investors to become cautious going into the thin year-end markets,” said ING currency strategist Viraj Patel, in London.

The dollar fell a quarter of a per cent against the yen, a currency that is traditionally sought at times of investor uncertainty. The dollar was trading at 111.27 yen, close to a 2-1/2-month low.

The euro climbed as high as $1.19965, its strongest since mid-September, boosted after German Chancellor Angela Merkel - whose chances for a fourth term were plunged into doubt a week ago when coalition talks collapsed - was handed a political lifeline by the Social Democrats.


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