Jon Cunliffe – Deputy Governor of the Bank of England – recently claimed that the risks cryptocurrencies pose to the financial sector are approaching. He urged regulators to take action before such an economic threat can manifest itself in traditional markets.
Crypto threatening the financial industry?
The governor shared his thoughts in a conversation with the BBC’s Today program on Monday. He was concerned that the volatility of the cryptocurrency markets would begin to trickle down to traditional financial markets. He said this risk is “getting closer” and urged regulators to “think very seriously” about the possibility.
“In my opinion, they do not represent, at the moment, a risk for financial stability, but they are developing very quickly and they are integrated more into what I could call the traditional financial system”, he said. declared.
This is not the first time that Cunliffe has presented this case. Last month, he argued that crypto markets are now big enough to send shocks to the rest of the financial system in the event of a collapse. Indeed, the industry has become more important than ever, having recently reached a market capitalization of $ 3 trillion.
The UK’s Financial Conduct Authority has yet to put in place sufficient consumer protections around cryptocurrencies. This includes regulations covering crypto ads, such as the Floki Inu banners that started appearing on London public transport last month. However, it appears that action is being taken in this regard, with local authorities recently banning such advertisements.
That said, the governor is less concerned about cryptocurrencies issued by private companies, such as Meta’s Diem (formerly Facebook). Since they have not reached mass adoption, regulatory action in this area is not urgent.
Perspectives of a CBDC for the British
Instead of opting for cryptocurrencies, the Bank of England consulted with an array of experts on the development of a CBDC – dubbed ‘Britcoin’. However, such a product would not be launched until at least 2025, according to policymakers. The bank will organize a consultation on the project in 2022, followed by a technical explanation of its architecture.
Cunliffe said the CBDC would be fully regulated and tied to the pound sterling to reduce volatility, which he called “the safest form of money”.
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