UK Financial Regulators At-Ease to Issue New Crypto Rules

The UK’s government officials and major financial regulators revealed that a fall in the price of Bitcoin and other cryptocurrencies has relieved the tension on Britain’s financial watchdog to take fundamental action that could dissuade or discourage financial innovation and investment.

The very swift boom in Bitcoin (BTC) and other major ICOs in 2017 prompted central bankers and regulators across the globe to oversee the industry.

But a decline in crypto value over the past 12 months as crypto investors make losses and a fall in BTC, which plunged by up to 10% on Tuesday, November 20, to reach around $4,400, has made it easy for the government and regulators to issue sturdy new rules.

The Proportionate Approach

The government and regulators are focused on how around 2,000 cryptos fit into the existing rules before taking into account reforms.

“We want to take the time to look at that in a bit more depth and make sure we take a proportionate approach,” Gillian Dorner, deputy director for financial services at Britain’s finance ministry, told a City & Financial conference.

The UK experiences the difficulty of making an innovative economy come into equilibrium with upholding consumer protection, preventing financial crime and more consistent markets, she revealed.

Christopher Woolard, ED for strategy and competition, Financial Conduct Authority, (FCA), revealed that it’s important to define “grey edges” within the existent regulatory perimeter.

The FCA will confer before 2018 ends on where exactly the regulatory perimeter falls for cryptos, he revealed.

Woolard further revealed that the ministry of finance would, therefore, confer on if the regulatory perimeter required shifting.

Crypto Task Force

The ministry of finance’s task force, the Bank of England (BoE) and the FCA in October this year proposed a blanket ban on the sale to all retail clients of derivatives commodities directly linked to cryptos.

But Christopher revealed that one-sided action by only one nation had its limits, and the FCA will have to collaborate with international partners.

World regulatory structures have, as of now, not been able to reach common agreement on rule variations and have rather opted to oversee the industry separately.


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Author: Coin Idol
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Is Carney an unreliable boyfriend – or just sensitive?

It all seemed a lot clearer in February. At the publication of its economic health check three months ago, the Bank gave a clear signal that interest rates would rise rather more quickly than expected.

Global growth was strong and the UK economy was caught in its positive tailwind.

Real incomes were starting to rise and inflation was still stubbornly above the 2% target.

Commentators started talking confidently of a rate rise this month and another one in the autumn.

The markets were so bullish they priced in a 90% probability of a hike before today was out. All such talk has withered.

Interest rates will remain at 0.5%.

Bounce back

Today the Bank struck a much more doveish note on the future path of interest rate rises – a doveish note first revealed by Mark Carney, the Governor, in his BBC interview last month.

The judgement has to be now that the next interest rate increase – unless there is a strong bounce back in the economy or inflation starts rising substantially again – will be far later this year.

The why is clear.

The economy took a major pounding in the first three months of 2018, with growth falling to 0.1% – well below the Bank’s own February forecast of 0.4%.

Although the Bank says that growth for the rest of the year will be stronger, that first quarter figure has led to a significant downgrade in the overall economic forecast for 2018.

Some of that is down to the poor weather, with the Bank being more aggressive about the negative effects of the Beast from the East (“a significant driver of reduced activity”) than the Office for National Statistics.

Then there are the “exceptional circumstances” of Brexit – which the Bank says it has to keep constantly in mind.

Global growth has also eased slightly and there is some evidence of declining consumer confidence alongside a softer housing market.

All in all, the Bank has become more cautious about the performance of the economy.

Consumer confidence

Yes, employment levels remain strong.

Incomes are rising slightly faster than inflation.

And the Bank does expect growth to bounce back over the rest of the year – alongside inflation falling more rapidly than expected over the next two years.

But there are just too many erratic’s for the Monetary Policy Committee to feel confident that now is the time to raise rates.

How will the increase in oil prices following America’s decision to pull out of the Iranian nuclear agreement affect inflation?

Will that miserable Q1 growth figure be revised upwards, as Q1 figures have been in the past, particularly those affected by the weather?

Will consumer confidence return?

Will there be a major Brexit break-through?

The critics might gather.

Wait and see

Is Mr Carney revealing once again his “unreliable boyfriend” tendencies, promising that interest rate rises are just around the corner, only to pull back?

He might suggest that he and the other eight members of the MPC are less the unreliable partners, more the “sensitive” listeners.

Sensitive to changes in the data which effect a decision based on fine margins and delicate judgements.

It was John Maynard Keynes who said that when the facts changed, so, sir, did he.

Today the Bank has changed tone.

Let’s wait and see, it is saying.

Let’s wait and see how the economy develops until we give any firm guidance on the path of interest rates beyond the Bank’s often used formulation of some limited rises “over the forecast period” of the next three years.

Yes, they will rise at some point.

But the chances of that happening sooner rather than later has receded.


 

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Author Kamal Ahmed 
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‘Any other decision would be a major surprise to markets’: Chances of a May rate hike falls to just 8%

Drop of 90 percentage points in one month

The market expectations of an interest rate rise in May has fallen 90 percentage points in one month following weaker-than-expected GDP data, lower inflation and Bank of England governor Mark Carney’s comments that it was not a “done deal”.

Carney’s comments that it was not a “done deal”.

At its February meeting, the Monetary Policy Committee suggested a rate rise would be needed “somewhat earlier” and to a “somewhat greater extent” than anticipated in order to bring inflation back to its 2% target, causing market expectations of a May rate rise to jump 17 percentage points to 67%.

More clarity was subsequently provided with regard to Brexit in March, a key issue for the MPC, with Michel Barnier and David Davis announcing both parties had agreed a large part of the transition deal when the UK leaves the bloc on 29 March 2019. These factors led markets to price in a 98% chance of a rate rise.

However, a string of bad data has led this to drop to just 8% with UK inflation falling to 2.5% in March, its lowest level in 12 months while the economy grew just 0.1% in Q1, the slowest rate since Q4 2012 and missing analysts’ expectations of 0.3% growth.

Furthermore, in an interview with the BBC on 20 April, Mark Carney attempted to quell market expectations of a May hike arguing there was still a lot of data to consider.

He said: “We have had some mixed data. On the softer side some of the business surveys have come off. Retail sales have been a bit softer – we are all aware of the squeeze that is going on in the high street.

“We will sit down calmly and look at it all in the round. I am sure there will be some differences of view but it is a view we will take in early May, conscious that there are other meetings over the course of this year.”

Commenting on the chances of a rate rise, Neil Birrell, CIO at Premier Asset Management, said: “We have moved very rapidly from the chances of an increase in interest rates in the UK being odds on to strongly odds against.

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“Two of the main drivers for any increase have both fallen away; inflation has fallen faster and further than expected and the GDP growth numbers have also been disappointing.
“If the ongoing uncertainty around Brexit is added in then the MPC is likely to err on the side of caution and keep the rate at the current level.

Birrell added that any other decision would now be “a major surprise to markets”, particularly sterling, which has weakened sharply and “may stay under pressure in the short term”.

“The balancing factor to the debate is that real wage growth is now in a healthier state, but not strong enough to tip the balance this month. The focus will be on any comments from the committee on the economic outlook and future path for rates.”

Ongoing uncertainty around Brexit is added in then the MPC is likely to err on the side of caution and keep the rate at the current level.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, added: “Back in early April, a rate rise at the May meeting was so widely predicted that it seemed nailed on. However, over the past few weeks, the picture has changed dramatically.

“Of course, a rate rise remains a possibility, but this is yet another ample demonstration of the futility of trying to guess the date of the next interest rate rise, and how dangerous it is to base your savings strategy on unreliable predictions.”


Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Author Tom Eckett 
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