Deputy Governor of the Bank of England: “Cryptocurrencies may affect bank loans”

The Deputy Governor for Financial Stability at the Bank of England has warned that the development of cryptocurrencyeconomies can weaken and even eliminate the issuance of bank loans.

In a speech at the London School of Economics, JohnJon Cuncliffe said the integration of stablecoins into social media platforms could change the existing banking system. People will begin to deposit most of their money stored in banks in stablecoin wallets. In this regard, Kankliff warned:

“In this case, and depending on howstablecoins are provided with other financial assets, the supply of loans for the real economy through the banking system may decrease or even disappear. This change would have had profound economic consequences. ”

Cuncliff believes that the main role of the Bank of England isensure that UK money "works safely and reliably." Virtual currencies raise “very important issues” for the government, regulators and the Bank of England. Cuncliff called on regulators and central banks to prepare for the challenges of the emerging cryptocurrency economy before it becomes “systemically significant.”

Bank of England official admitted that the currentthe financial system includes "the equivalent of 18th century bank clerks with goose feathers, amending banks' books to debit one account and lend to another." The stablecoins will offer a number of advantages, including “a very significant reduction in the cost of payments, especially cross-border ones”, and “greater financial affordability due to simple and cheap access to payment services for those who are limited in obtaining banking services”.

However, Cuncliffe argues that regulators shouldBe prepared for the risks associated with stablecoins. He warns that due to the size of Facebook, Libra's stablecoin can reach such a level of distribution that it will “become systemically important very quickly.” He notes that the Financial Stability Board (FSB) will release a report this year that will address “regulatory recommendations for stablecoins.”

Recall that recently the chief cashier of the Bank of Englandsupported the idea of ​​issuing a digital pound. Bank of England Governor Mark Carney said earlier that the US dollar, which is the global reserve currency, needs to be replaced with a digital currency similar to Libra.

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