The Deputy Governor of the Bank of England John Cunliffe called Bitcoin a greater threat to financial stability in comparison with stablecoins and expressed support for the digital currencies of the Central Bank.
According to Financial News, Jon Cunliff said that of all cryptocurrencies, Bitcoin poses the greatest risk to the global financial system. He explained that at the moment digital assets are not dangerous for the financial market. However, cryptocurrencies are developing and are rapidly being introduced into various fields of activity, so their high volatility can be transmitted to the traditional financial market.
“Cryptocurrencies are approaching the point where they can pose a major threat to the world of finance. Regulators and legislators should think well about this and clarify the regulation of cryptoassets, ”said Cunliffe.
He believes that unlike conventional cryptocurrencies, stablecoins pose less of a threat, as they are tied to fiat currencies or physical commodities (like gold or oil), which curbs their volatility. However, even stable cryptocurrencies may fall far short of regulatory compliance, Cunliffe argues. He mentioned the stablecoin Diem, which social giant Meta, formerly known as Facebook, is working on.
That being said, Cunliffe is confident that central bank digital currencies have great potential. The Bank of England is actively exploring the possibility of introducing the digital pound sterling, as in the modern world, the methods of conducting transactions are changing and moving to a digital format.
“New players are entering the market, including large technology platforms and social platforms. They intend to issue their own “money” without being banks. However, their proposals cannot be called large-scale, so central banks are not lagging behind them and are working hard to create government stablecoins, ”said Cunliffe.
Next year, the Bank of England and the UK Treasury will begin a public discussion on the digital pound’s possibilities to see if it makes sense for organizations and individuals to launch it.
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