Bank of England Deputy Governor Jon Cunliffe believes that cryptocurrencies are not large enough to pose a risk to financial stability. “They are not big enough to pose a risk to financial stability, and they are not deeply embedded in the perennial financial system,” said the deputy governor.
Crypto poses no risk to financial stability, says the deputy governor of the Bank of England
Jon Cunliffe, the deputy governor of the Bank of England, spoke about cryptocurrency and whether it poses a risk to financial stability in an interview with CNBC on Wednesday. He said:
The speculative boom in crypto is very noticeable, but I don’t think it has crossed the line to risk financial stability.
The deputy governor of the Bank of England stated that crypto speculation is currently mostly limited to retail investors. He reiterated the position of the UK central bank that people who invest in cryptocurrency should be willing to lose all of their money, the position expressed several times by Andrew Bailey, the governor of the Bank of England.
There are questions of investor protection here. These are highly speculative assets. But they are not large enough to pose a risk to financial stability, and they are not deeply tied to the existing financial system.
He commented, “If we were to start seeing these connections developing, if we were to start shifting more from retail to wholesale and looking at the financial sector more exposed, then I think you might in that vein start thinking about risks. ”
Cunliffe noted that speculative crypto assets like Bitcoin should be distinguished from stablecoins, and stressed that stablecoins should be regulated. The Deputy Governor said: “I think the international community must at least develop standards in order to actually be able to differentiate, but also have regulatory standards for this type of product.”
The Governor of the Bank of England previously labeled cryptocurrencies as dangerous and predicted they will not last. He said in June, “There will inevitably be elements of hard love” in crypto regulation.
In May, Bailey said that cryptocurrencies “have no intrinsic value,” but noted that that “does not mean that people attach no value to them because they can have external value”. The President of the European Central Bank (ECB), Christine Lagarde, agreed.
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