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Deputy Governor of the Bank of England: Cryptocurrencies pose an imminent threat to financial stability

Deputy Governor of the Bank of England: Cryptocurrencies pose an imminent threat to financial stability

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Answer Deputy Governor of the Bank of England: Cryptocurrencies pose an imminent threat to financial stability

Sir John Cunliffe of the Bank of England has urged British lawmakers to think very seriously about the disruption that incorporating cryptocurrencies into traditional finance could cause.

Cunliffe told the BoE Deputy Governor that financial stability could be under threat from cryptocurrencies, and cryptocurrencies could cause the traditional financial system to collapse.

During an interview On November 15 on the BBC’s Today programme, Cunliffe stated:

The rapid growth of digital assets and their integration with traditional financial services could soon pose systemic risks.

He added:

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“Cryptocurrencies are growing very fast, and they are becoming more and more integrated into what I would call the traditional financial system.

So the point at which they pose a danger is approaching.

I think regulators and lawmakers need to think carefully about that.

While Cunliffe cautioned against integrating volatile cryptocurrencies into the mainstream financial system, he dismissed neighboring concerns about the rise of digital stablecoins.

He commented about it by saying:

There are proposals for new non-bank players, including some big tech platforms and some social media platforms, to come into the world and issue their own money.

I think these proposals are not yet widely available, so I don’t think we are behind the curve here.

Cunliffe’s latest comments come about a month after he addressed the Association for Global Interbank Financial Telecommunication on October 13, calling on policymakers to pursue crypto regulation as a matter of urgency.

Although it is recognized that crypto technologies offer the potential for radical improvements in financial services.

Cunliffe argued that the sector poses significant risks through price volatility, a lack of consumer protection laws, and the absence of anti-money laundering (AML) provisions in the DeFi sector.

Read:Ghana begins experimenting with central bank digital currency

About her (Conliffe) said:

The extent to which these risks could increase will depend to a large extent on the nature and speed of response by the regulatory and supervisory authorities.

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On November 9, the Bank of England and the Treasury issued a joint statement outlining their upcoming research into central bank digital currencies (CBDC) for the UK market.

The duo will launch a consultation in 2022 to assess the feasibility of a UK CBDC, explore potential design features, and consider the positive and negative implications of issuing a central bank digital currency.

The Bank of England added that no decision has been taken to launch a CBDC at this point.

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