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Here's Why Canadian Government Won't Hold Bitcoin

Mon, 18/01/2021 - 16:02
Holding Bitcoin is not a priority for the Canadian government
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Here's Why Canadian Government Won't Hold Bitcoin
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The Canadian government is not on the Bitcoin train just yet.

In a reply to BNN Bloomberg, the Department of Finance Canada confirms that he has no plans to hold the cryptocurrency just yet, with volatility cited as the main reason why.

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The foreign reserves of the country's central bank are managed in accordance with its asset-liability matching framework.

Because of its wild moves, the biggest cryptocurrency cannot be matched against liabilities:

Bitcoin does not meet these criteria as it remains relatively volatile and cannot be paired under the Asset-Liability Matching framework.

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Last week, Bitcoin collapsed almost 20 percent in the span of 16 hours before soaring back above $40,000 in three days.

Five major Canadian commercial banks have declined to comment on whether or not they would start holding Bitcoin.

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Volatility means resilience

Last week, former U.S. Treasury Secretary Lawrence Summers mentioned that Bitcoin's volatility has actually made it more resilient:

I think that having run up and then run way down, and then move back, it looks much more resilient, and therefore I think people are going to move towards it.

Investment management firm Man Group even likened Bitcoin to Greek Titan Prometheus because of its ability to survive a metaphorical bloodthirsty eagle.

Meanwhile, investing icon Bill Miller opined that the cryptocurrency is less risky when it is more expensive.

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