While Fiat currencies are being totally devalued again and again, the Vice Governor of the Bank of England (BoE) worries about the price stability of cryptocurrencies.
Sir Jon Cunliffe, Deputy Governor of the British Central Bank, the Bank of England, is not a fan of cryptocurrencies. The crypto industry would grow “very quickly”, but a “regulatory framework had to be in place quickly to contain the risks”.
The Bank of England executive emphasized that at this rate of growth, cryptocurrencies could pose a threat to the established financial system. Even if only about 0.1 percent of the wealth of British households is currently in cryptocurrencies.
It is estimated that around 2.3 million people in the UK own cryptocurrencies. Each of them therefore owns an average amount of around 300 British pounds (approx. 353 euros).
Cunliffe warned that a sharp drop in the value of cryptocurrencies could have a domino effect. He stressed that the Bank of England must be ready to contain these risks.
He said: “Their price can fluctuate quite a lot and they could theoretically or practically fall to zero.” This is probably even more true of fiat currencies. At least when it comes to the risk of hyperinflation. History has shown this often enough.
As more and more people – among other things, thanks Bitcoin Code – invest in crypto currencies, however, it is unlikely that the big cryptos in particular will suffer a complete loss of value. In particular, Bitcoin, the supply of which is limited.
This is not the first time Cunliffe has issued a warning about the depreciation of cryptocurrencies. It wasn’t until October that the BoE manager said the digital currencies could collapse. He urged regulators to act quickly to put in place a regulatory framework for them.
“It’s not there yet, but it takes time to develop standards and regulations,” he told the BBC. “We really need to roll up our sleeves and keep going so that by the time this becomes a much bigger problem, we actually have the regulatory framework to contain the risks.”
Sources: PublicDomain on December 23, 2021