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Bank of England warns: cryptocurrencies pose a threat to financial systems

The Bank of England warns again that cryptocurrencies can pose a threat to already established financial systems, so let’s take a closer look at the latest news on cryptocurrencies.

The Bank of England warned that existing cryptocurrency risks could become a problem for the established financial system.

It warns of the cryptocurrency industry and its risks that could be dangerous to the established financial system. The Bank’s Deputy Governor Sir Jon Cunliffe said:

“I think the problem people worry about is when it gets built into the financial system, when a big correction can really affect other markets and market participants. Finance has a name. It doesn’t exist yet, but it needs to Time to draft standards and regulations. “

Sir Cunliffe says the risks will increase if the crypto industry is rampant and currently the bank’s deputy governor says only 0.1% of the UK’s household wealth is invested in crypto, but also has 2.3 million people in the UK estimated crypto-related investments averaging £ 300 per person. He says:

“We really need to roll up our sleeves and start so that when this becomes a much bigger issue, we actually have the regulatory framework to contain the risk.”

This is not the first time the UK central bank has spoken about the risks of the crypto industry, as both the bank and Sir Cunliffe said bitcoin could lead to financial instability in the UK:

“Of course, $ 2.3 trillion has to be seen in the context of the $ 250 trillion global financial system. But as the financial crisis showed us, you don’t have to be a large part of the financial sector to create financial instability problems. “

A week later, the bank reconsidered, this time with the opposite message:

“The market for crypto assets continues to grow rapidly, but currently poses limited risks to the UK’s financial stability.”

The bank also targeted El Salvador, saying it viewed this as a dubious ingestion of BTC as a legitimate offer, as Bank Governor Andrew Bailey said:

“I worry that a country will vote [Bitcoin] is its national currency. ”

Annie

Championing positive change through finance, I've dedicated over eight years to sustainability and environmental journalism. My passion lies in uncovering companies that make a real difference in the world and guiding investors towards them. My expertise lies in navigating the world of sustainable investing, analyzing ESG (Environmental, Social, and Governance) criteria, and exploring the exciting field of impact investing. "Invest in a better future," I often say. That's the driving force behind my work at Coincu – to empower readers with knowledge and insights to make investment decisions that create a positive impact.