Cryptocurrencies represent a deeply flawed form of money, but policymakers should be careful not to crack down too hard on “crypto-assets,” Mark Carney, governor of the Bank of England, argued in a speech (pdf) today.

Failing as money: Carney excoriated Bitcoin and similar cryptocurrencies, calling them poor stores of value and inefficient media of exchange. The prospects that cryptocurrency will replace fiat money are “tenuous at best,” he said.

Don’t over-regulate: Cryptocurrencies are not “true currencies” and should instead be thought of as “crypto-assets,” Carney said, adding that they could have valuable future applications—for instance, as part of “more innovative, efficient, and reliable payment systems.” He cautioned against overzealous regulation or outright bans, lest they stifle innovation that could indeed lead to large-scale improvements in the financial system.

Kids’ stuff: Ultimately, Carney said, the British bank is keeping an “open mind” about whether it might one day issue its own digital money. But if it does, it “shouldn’t be a solution in search of a problem or an effort of central bankers to be down with the kids.”

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