The finance minister of Norway appeared to break away from the chorus of Bitcoin critics and suggested that cryptocurrencies will at some point move past the volatility for which they’re currently known and experience a period of “breakthroughs.”
“It is clear that there may be a development over time, whereby you will be able to get more stabilization mechanisms in the currencies that can lead to greater breakthroughs and upheavals in the slightly longer term,” Jan Tore Sanner said in an interview on Tuesday. For now, though, the finance minister warned that it’s “not a market I would recommend consumers to enter.”
The ascent of Bitcoin and its rivals has triggered a slew of warnings from governments and monetary authorities, who point to cryptocurrencies’ lack of any underlying value as a fundamental flaw in their design. Meanwhile, central bankers are racing to produce their own digital currencies to fill the void left by an increasingly cashless world.
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What Bloomberg economics says…
“Fears of a ‘digital dollarization’ with a gradual loss of control over monetary conditions is one reason for central banks to introduce digital currencies of their own (as an alternative to private cryptocurrencies). As central banks accelerate moves toward a public digital payments option, it’s also likely that they will step up efforts to keep the volatile cryptocurrencies in check,” says Johanna Jeansson, Nordic economist.
The governor of Norway’s central bank, Oystein Olsen, is among Bitcoin’s detractors. But in Norway’s industrial heartland, the billionaire owner of one of the country’s biggest corporate empires has emerged as a Bitcoin enthusiast. Kjell Inge Rokke, majority shareholder in Aker ASA, says Bitcoin will end “on the right side of history,” and the chief executive of Aker recently hinted the company might even consider taking payment in Bitcoin.
Sanner says he can’t see crypto assets going mainstream until they’re properly regulated, which European authorities are currently working on. For now, cryptocurrencies are also “popular with criminals,” he warned.
The finance ministry of Norway, which is among the world’s most cashless societies, unveiled stricter registration requirements for cryptocurrency service providers earlier this week, as part of new measures to fight money laundering. On Wednesday, the country’s financial watchdog urged consumers to think hard before putting their money into assets such as crypto, digital art, or precious metals, given the risks.
The threat to mainstream markets from the volatility in cryptocurrencies is currently “rather limited,” according to Erik Thedeen, the head of Sweden’s Financial Supervisory Authority. But that could change if they become “a more established asset among larger corporates and financial companies,” he said on Tuesday.
Sanner says people should be free to decide for themselves whether they feel comfortable investing in Bitcoin. But he also said it’s yet not ready to be used as a substitute for money.
“There is no doubt that there is great interest in cryptocurrency both in Norway and internationally,” Sanner said. “But so far it has been unsuitable as a means of payment.”