Once again a Central Bank is warning of the risks linked to the world of cryptocurrencies, talking about a cryptocurrency crash. This time it is the deputy governor of the Bank of England, Jon Cunliffe, who is sounding the alarm.
Cunliffe speculates on cryptocurrency collapse
Cunliffe says it is possible that there will soon be a collapse of the main cryptocurrencies and therefore regulators should intervene to put a brake on the development of digital currencies.
These are Cunliffe‘s words:
“Regulators internationally and in many jurisdictions have begun the work. It needs to be pursued as a matter of urgency”.
Cunliffe also spoke of the possibilities of applying to stablecoins, which have increased in value 16-fold in two years, the rule of collateral coming from the markets with clearinghouses.
To reinforce his point, he referred to the 2008 crisis, fearing that a similar situation could be repeated with the cryptocurrency market.
“As the financial crisis showed us, you don’t have to account for a large proportion of the financial sector to trigger financial stability problems – sub-prime was valued at around $1.2 trillion in 2008″.
This is not the first warning the Bank of England has issued about cryptocurrencies. Last May, the bank’s governor Andrew Bailey had said that cryptocurrencies have no intrinsic value, and therefore investors should be prepared to lose everything.
“I’m going to say this very bluntly again, Buy them only if you’re prepared to lose all your money”, he said referring to cryptocurrencies.
BoE and the digital state currency
In the face of these harsh words about cryptocurrencies, the Bank of England has long been thinking about creating its own digital state currency.
It recently convened a forum to which all the major players in the tech world were invited to discuss the possibilities of creating a UK CBDC. This move would also be in opposition to traditional digital currencies, which are seen as a danger to the stability of traditional currencies.
As also stated by the Bank for International Settlements, it is necessary for central banks to think about the adoption of digital state currencies, precisely to compete with traditional digital currencies.
The BOE has repeatedly pointed out that its eventual CBDC would not be a traditional cryptocurrency, like Bitcoin, but a centrally regulated stablecoin.
Some companies in the UK accept crypto payments
The Bank of England is paying close attention to the world of cryptocurrencies, as the adoption of cryptocurrencies and digital currency payments in the UK becomes more and more widespread. An increasing number of companies, even giants like Lush or the office-sharing company WeWork, have started receiving crypto payments for goods and services.
According to Chainalysis, Great Britain is leading the list of European countries where cryptocurrency adoption is most widespread. According to the company’s analysts, the country is becoming a European hub for cryptocurrencies. According to the report by Chainalysis, DeFi products are the ones that are growing the most among institutional investors.
Perhaps this data also explains the alarming words of the Bank of England, which sees the growing spread of digital currencies as a possible risk of instability for its traditional banking system.