Crypto technologies have become a financial stability concern, a deputy Bank of England governor said.
“Crypto technologies offer a prospect of radical improvements in financial services,” deputy governor for financial stability Sir Jon Cunliffe said in a 13 October speech at Sibos. “However, while the financial stability risks are still limited, their current applications are now a financial stability concern for a number of reasons.”
Most cryptoassets have “no intrinsic value” and can suffer major price swings, Cunliffe said, as the traditional financial system is starting to link up with the world of crypto with leveraged players entering the fray.
“Crucially, this is happening in largely unregulated space,” he said. “Financial stability risks currently are relatively limited but they could grow very rapidly if, as I expect, this area continues to develop and expand at pace.”
While Cunliffe said the Bank “should not classify new approaches as ‘dangerous’ simply because they are different,” he added that “when something in the financial system is growing very fast, and growing in largely unregulated space, financial stability authorities have to sit up and take notice…They have to think very carefully about what could happen and whether they, or other regulatory authorities, need to act.”
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