Andrew Haldane, Bank of England’s (BoE) chief economist, shared a surprising personal opinion after giving a talk at one UK college. While answering various questions from the audience, he said that Bitcoin could replace cash. This was first shared in a Reddit thread started by a student who attended Haldane’s talk.
A Sudden Shift from a Bearish Attitude on Bitcoin
Haldane’s statement is surprising in view of his previous attitude towards Bitcoin and other cryptocurrencies. Last March, the Chief Economist of the Bank of England warned investors against investing in cryptocurrencies.
However, his warning came in light of the sharp and continuous drop in Bitcoin prices at the time. After Bitcoin’s all time high in December 2017, by March 2018, there was a massive drop of over 40%, and it caused panic throughout the entire crypto market. In the light of these market conditions, it is understandable that an official representative of the central bank of the UK issues that warning.
Haldane also said at that time that Bitcoin did not threaten the banking system. Also, in his opinion, cryptocurrencies are not scalable and represent less than 1% of the global wealth.
What Changed the BoE’s Chief Economist’s Opinion?
Most likely, the vigorous recovery of Bitcoin prices made Haldane reconsider his position. Since January of this year, Bitcoin prices have gone up by 110%, hitting US$7906 at the time of writing.
As for the moment when Bitcoin would replace cash, the Redditor 4vWte1ovZK1i writes:
He [Haldane] said he didn’t think it’d replace cash tomorrow, but he was quite open to the idea, 20 or 30 years down the line. However, the original poster also added a further comment explaining that it was the “impression” he got from the BoE’s chief economist. He added:
Like a politician, he avoided any explicit predictions.
How Should The Market Interpret This Opinion?
First of all, it is important to keep in mind that this was a spontaneous expression of opinion during a conversation with students. Haldane might have been trying to end his talk on a positive note. The Reddit post also quotes him as joking that “there are now thousand” of cryptocurrencies.
Yet, as an official representative of the Bank of England, Haldane knows that all his statements will eventually appear in the press and become a topic of discussion. Thus, he probably believes in the future of Bitcoin and other cryptocurrencies. Without explicitly endorsing their legitimacy, he made a significant statement on this topic.
Of course, it may take longer than 20-30 years to see Bitcoin replacing cash. Or the two forms of currency will coexist on many markets. But one thing is clear: scepticism is waning, and confidence in digital currencies grows stronger on all levels.