Bank of England governor Andrew Bailey warned investors against buying cryptocurrencies on Thursday, urging enthusiasts to only “buy them if you’re prepared to lose all your money”.
When Mr Bailey was asked by journalists whether the BoE was concerned about wild price swings in the cryptocurrency markets, he said: “I’m afraid they don’t have intrinsic value.”
“Now that doesn’t mean to say that people don’t put value on them because they can have extrinsic value. But they have no intrinsic value,” Mr Bailey said.
“So, I’m going to say this very bluntly again; buy them only if you’re prepared to lose all your money. I'm afraid currency and crypto are two words that don't go together for me."
The BoE chief was speaking at the end of a press conference on the central bank's latest Monetary Policy Report, in which the lender said it expected the UK economy to expand 7.25 per cent this year as the country eases out of the Covid-19 crisis.
The bank held interest rates at record lows on Thursday and kept the size of its stimulus programme unchanged, with Britain set to enjoy its strongest peacetime growth as Covid-19 restrictions ease.
Bitcoin and ethereum, the two biggest cryptocurrencies, surged to record highs earlier this year as institutional investors piled into the digital asset space and retailers flocked back.
Meanwhile, Meme-based virtual currency Dogecoin soared to an all-time high this week, extending its 2021 rally to become the fourth-biggest digital coin.
Dogecoin, launched as a satirical critique of 2013's cryptocurrency frenzy, has risen more than 14,000 per cent since December 31, taking it past more widely-used cryptocurrencies such as the Tether stablecoin and XRP to become the fourth-largest by market capitalisation.
Mr Bailey has long been dismissive of the assets. In January he told the World Economic Forum that existing cryptocurrencies are unlikely to last as a means of payment over the long term.
He said while there been huge innovation in payments in recent years and that digital innovation is here to stay, existing digital currencies do not have a structure that will allow them to last.
“Have we landed on what I would call the design, governance, and arrangements for what I might call a lasting digital currency,” he asked the WEF panel. “No, I don't think we're there yet, honestly. I don't think cryptocurrencies as originally formulated are it."
Last month, the BoE said it would join forces with the UK Treasury to weigh the potential creation of its own central bank digital currency, joining authorities across the globe exploring the next big step in the future of money.
If approved, the UK’s digital currency would exist alongside cash and bank deposits, rather than replacing them, the central bank said.
More on cryptocurrencies
BoE's Andrew Bailey: Current cryptocurrencies aren’t built to last
Anthony Scaramucci’s SkyBridge Capital to focus on new ‘digital gold’ Bitcoin
Can Bitcoin’s value really soar to $400,000?
UAE tour of Zimbabwe
All matches in Bulawayo
Friday, Sept 26 – UAE won by 36 runs
Sunday, Sept 28 – Second ODI
Tuesday, Sept 30 – Third ODI
Thursday, Oct 2 – Fourth ODI
Sunday, Oct 5 – First T20I
Monday, Oct 6 – Second T20I
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
Reading List
Practitioners of mindful eating recommend the following books to get you started:
Savor: Mindful Eating, Mindful Life by Thich Nhat Hanh and Dr Lilian Cheung
How to Eat by Thich Nhat Hanh
The Mindful Diet by Dr Ruth Wolever
Mindful Eating by Dr Jan Bays
How to Raise a Mindful Eaterby Maryann Jacobsen
UAE currency: the story behind the money in your pockets
