Jon Cunliffe of the Bank of England warns that the rapid growth of the sector brings Bitcoin and crypto ever closer to being a threat to financial stability and urges regulators to act.
Bank of England and the threat of Bitcoin and crypto
Jon Cunliffe, deputy governor of the Bank of England, spoke about Bitcoin and crypto on the BBC’s Today programme yesterday.
Cunliffe reportedly warns that the crypto sector is growing so rapidly, even integrating into the mainstream financial system, that the “threat” to global financial stability is near.
Here are his verbatim words:
“My judgement is they’re not, at the moment, a financial stability risk, but they are growing very fast, and they’re becoming integrated more into what I might call the traditional financial system. […] “So the point at which they pose a risk is getting closer. I think regulators and legislators need to think very hard about that”.
Bank of England: Cunliffe also explores stablecoins and the UK CBDC
Continuing on the topic of crypto, Cunliffe commented on the stablecoins of global giants such as Meta, formerly Facebook, and CBDCs. In the first case, Meta’s stablecoin Diem is currently only a proposal, and therefore, according to Cunliffe, there are still no grounds for considering them at the level of financial stability.
Whereas on the subject of Central Bank Digital Currencies (CBDCs), Cunliffe commented:
“The reason why we might consider, why we’re actively exploring introducing the digital pound, digital form of Bank of England cash, is that the way we live and the way we transact is changing all the time. […] The question is whether the public at large, businesses and households, should really have the option of using and holding the safest form of money — which is Bank of England money — in their everyday lives. That’s the question that we’ll explore in this taskforce between the Treasury and the Bank of England over the next year”.
Already last August, the British Chancellor of the Exchequer, Rishi Sunak, had dubbed the digital pound as Britcoin. And indeed, the Bank of England has been exploring the project to create its own CBDC since last year.