BoE warns that cryptocurrencies will affect credits

The Deputy Governor of the Bank of England (BoE), Jon Cuncliffe, said that the adoption of cryptocurrencies within the economic market could weaken or eliminate the issuance of bank credits.

In a speech delivered over the weekend, Cuncliffe stressed that the integration of stablecoins in social media platforms “could lead people to put a large part of their money in their purses”.

“In such a world, and depending on how and if the stablecoins were backed by other financial assets, the supply of credit to the real economy through the banking system could weaken or even disappear. That would be a change with profound economic consequences”, the deputy governor said.

On the other side, he defined the role of the Bank of England, such as ensuring that UK money works reliably and safely.

Cuncliffe urged regulators and central banks to prepare for the unique challenges associated with the emerging cryptoecosystem before it becomes “systemically important.”

The Bank of England official acknowledged that the current financial system includes “the equivalent of eighteenth-century bank employees with pens that alter the accounting books of their banks to charge in one account and pay in another”.

K. Tovar

Source: Cointelegraph