update 18 August 2021

Crypto Adoption May End Bank Credit Issuance, BoE Official Warns

The deputy governor for the Bank of England (BoE), Jon Cuncliffe, warned that the crypto economy’s exponential growth might weaken or end bank credit issuance. Cuncliffe pointed out this while delivering a speech at the London School of Economics on the 28th of February.

Cuncliffe stated that BoE’s role is to ensure that the UK’s money works safely and reliably. The BoE official predicted that the integration of stablecoins on social media platforms, including the Libra project, could result in people investing most of their funds, which are currently held with banks, into stablecoins.

Cuncliffe Points out the Benefits of Crypto Adoption

The BoE official noted the numerous advantages stablecoins offer, including the slashed payment costs, mostly the cross-border payments. He said stablecoins also offer greater financial inclusion through more effortless and cheaper access to payment services for people with no bank accounts.

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Nevertheless, Cuncliffe claims that virtual currencies pose critical questions for the UK government, regulators, and the BoE. Additionally, he urged regulators and central banks to prepare for the emerging crypto industry’s unique challenges before becoming systematically essential. Cuncliffe further warned that Facebook’s large size would give its proposed Libra stablecoin a wider crypto adoption.