Deputy Governor for Financial Stability at the Bank of England (BoE) warned about cryptocurrencies such as Bitcoin rapidly reaching the threshold of mainstream adoption– worried about the ripple effect a sudden price correction could have on the established financial system, BBC reported.
Sir Jon Cunliffe voiced his concerns following the Bank’s latest Financial Stability Report that examined the health of the UK’s financial system.
The Bank needs to be ready to contain risks
While pointing out that cryptocurrencies have been “growing very fast,” Sir Jon Cunliffe noted that currently about 0.1% of UK households’ wealth was in crypto, with roughly 2.3 million people estimated to have exposure.
“Their price can vary quite considerably and they could theoretically or practically drop to zero,” he said, underscoring that the Bank needs to be prepared to mitigate those risks.
“The point, I think, at which one worries is when it becomes integrated into the financial system, when a big price correction could really affect other markets and affect established financial market players,” he said.
“It’s not there yet, but it takes time to design standards and regulations,” he cautioned.
Regulatory framework for crypto-ASAP
“We really need to roll our sleeves up and get on with it, so that by the time this becomes a much bigger issue, we’ve actually got the regulatory framework to contain the risks,” urged Sir Jon Cunliffe.
According to the Bank of England’s financial stability committee, the risks to the financial system have returned to their levels before the pandemic.
“Major UK banks are strong enough to keep supporting households and businesses, even in severe scenarios,” the Bank said, while adding that “uncertainty over risks to public health and the economic outlook remains.”
“For example, there are near-term pressures on supply and inflation, and there could be a greater impact from Covid on activity, especially given uncertainties about whether new variants of the virus reduce vaccine efficacy,” added the Bank.
Once again, banks will have to build up extra capital protection against future shocks– worth 1% of all their loans, also known as ‘countercyclical capital buffer.’
The post Bank of England warns crypto could threaten the established financial system appeared first on CryptoSlate.
843214 665324What web host are you the use of? Can I am getting affiliate link to your host? I wish web site loaded up as fast as yours lol 798780
561189 790186Theres noticeably a bundle to locate out about this. I assume you created certain very good points in capabilities also. 295332
488045 697915Thank you for this. Thats all I can say. You most certainly have produced this into something thats eye opening and important. You clearly know so significantly about the subject, youve covered so many bases. Wonderful stuff from this part of the internet. 715289
634273 970057I actually like your article. Its evident that you have a whole lot information on this subject. Your points are properly produced and relatable. Thanks for writing engaging and intriguing material. 175940
689253 724241The total look of your site is excellent, let smartly as the content material! 123953
882783 18331This site is truly a walk-through it truly will be the details you wanted concerning this and didnt know who to inquire about. Glimpse here, and you will definitely discover it. 576122