Bank of England warns about cryptocurrencies

Although not much of the UK household wealth is currently held in assets like Bitcoin, they are becoming more common, said the Bank’s Deputy Governor Sir Jon Cunliffe.

If its value drops dramatically, it could have a ripple effect, he said. The Bank must be prepared to contain those risks, he added. Speaking to the BBC’s Today show, Sir Jon said that around 0.1% of UK household wealth is currently in cryptocurrencies. An estimated 2.3 million people had them, with an average per person of around £ 300.However, he emphasized that cryptocurrencies had been “growing very fast,” and people like fund managers .

wanted to know if they should keep part of their portfolios in crypto. Their price can vary considerably and, theoretically or practically, they could drop to zero,” she said. I think the point where you worry is when you integrate into the financial system, when a big price correction could really affect other markets and affect the established players in the financial market. It is not there yet, but it takes time to design standards and regulations.

He added: “We really have to roll up our sleeves and move on, so that when this becomes a much bigger problem, we have the regulatory framework to contain the risks. Sir Jon spoke the day after the Bank released its latest Financial Stability Report, which examined the health of the UK financial system. The report said UK households had remained “resilient” despite the end of the licensing scheme and other supportive measures from Covid.

However, he added that uncertainty about health risks and the economic outlook remained. Covid could still have “a bigger impact” on the economy, especially in light of new variants, he said. The report comes as the Bank’s policymakers prepare to announce their next decision on interest rates on Thursday. The cost of living increased 4.2% in October, its highest rate in almost 10 years.

This surge in inflation has led analysts to predict an increase in interest rates from their current all-time low of 0.1%. But recently doubts have been raised due to the spread of the Omicron variant. The UK and world economies have continued to recover from the effects of the pandemic. But uncertainty remains about the risks to public health and the economic outlook,” the Bank said.

 

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