Central bank news conferences are typically most interesting at their very beginning, when there is still uncertainty over what policy makers are trying to communicate, and at the very end, when reporters start asking less obvious questions.
So it was with the final query posed to Bank of England Gov. Andrew Bailey, who was asked what cryptocurrencies say about the current state of financial markets.
Bailey balked at the very wording. “Crypto and currency are two words that don’t go together for me,” he said, preferring the term “crypto assets.”
“I’m afraid they have no intrinsic value,” he continued. “That doesn’t mean that people don’t put value on them, they can have extrinsic value.”
“I’m going to say this very bluntly again — buy them only if you are prepared to lose all your money,” he added.
The total market capitalization of the leading crypto asset, bitcoin BTCUSD, +3.14%, was $1.07 trillion on Thursday, according to crypto exchange CoinDesk, with ethereum ETHUSD, +3.73% worth $404 billion and XRP XRPUSD, +1.59% $164 billion.
Bailey pointed out that the Bank of England’s financial policy committee is scheduled to review market developments in June, though he didn’t see any new financial stability risks.
Federal Reserve Chair Jerome Powell was asked a similar question at his last press conference, and one point he made is that while asset prices might be “a bit frothy,” leverage wasn’t excessive. “Leverage in the financial system is not an issue,” said Powell.