#Bank of England Is Worried That Crypto Could Destablize Established Financial System

 

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The Bank of England has one again warned of the potential threat that cryptoassets pose to the world’s existing financial system. 

According to a report by BBC News, the UK’s central bank, i.e. the Bank of England (BoE) has issued a warning about the risks of cryptocurrency and the impact the industry could have on existing financial systems. 

Sir Jon Cunliffe, deputy bank governor, told the BBC that a price correction in the crypto markets could have profound ramifications for other industries:

“The point, I think, at which one worries is when it becomes integrated into the financial system when a big price correction could really affect other markets and affect established financial market players.“

He went on to add:

“It’s not there yet, but it takes time to design standards and regulations. We really need to roll our sleeves up and get on with it, so that by the time this becomes a much bigger issue, we’ve actually got the regulatory framework to contain the risks.”

The bank governor warned that the risks involved in crypto would grow proportionally with its adoption. He noted that at present only 0.1% of UK household wealth was tied up in cryptoassets, with 2.3 million UK citizens holding crypto investments (at an average value of £300 per person). 

The Bank of England has previously railed against the impact of cryptoassets, claiming in October that Bitcoin could trigger financial instability in the UK. Sir Cunliffe argued that crypto’s smaller market capitalization ($2.3 trillion versus $250 trillion in the global financial system), could still create a tidal wave effect, as evidenced by the housing market collapse triggering the 2008 recession.