The financial stability’s deputy governor at the BoE (Bank-of-England), Jon Cunliffe, stated that the risks of a progressing crypto market regarding the system of finance are comparatively lesser at the current time; however, they have the potential to expedite with a very fast speed in the case of negligence on behalf of the regulators. During a speech addressing the SWIFT (Society-for-Worldwide-Interbank-Financial-Telecommunication) on 13th October, Cunliffe mentioned that policymakers across the world have just commenced with the development of the framework which is required for the proper regulation of virtual assets. Nonetheless, they should follow it and give it due importance because it is a matter of immediate response.
He then focused the attention on the risks which might be posed by stablecoins and cryptocurrencies in association with the systems of traditional finance via individuals, banks, hedge funds, and financial institutions. As the virtual assets are being persistently run by such institutions, the feeling about crypto volatility could urge the investors to trade other assets being categorized as risky. Cunliffe pointed towards the interrelation between traditional finance and crypto, which is the potentiality of a shock (being transferred via the system of finance) in the case of some mishap.
One of Cunliffe’s presented scenarios was related to the dipping of the price of a crypto asset (which is unbacked) to zero. Moving ahead, the price volatility could activate margin calls on several crypto positions to compel leveraged investors to discover cash to encounter them, even in the prominent cryptocurrencies. This eventually paves the way for the other assets’ trade and produces spillovers for the other markets. At present, the risks for financial stability are comparatively narrow nevertheless have the capability of developing instantly as is expected.
The world of cryptocurrency and blockchain technology is persistently developing and expanding at a high level, said Cunliffe. The extent of the surge of such risks in the future will be determined largely by the supervisory and regulatory authorities’ speed in giving a response. It has been previously argued by Cunliffe that the central bank of England should release virtual public money that can adequately fulfill the requirements of contemporary day-to-day life. By saying this, he signified that the future of BoE is likely a virtual pound. Presently, a task force is being co-chaired by him, which has been arranged by the U.K. authorities to delve deep into the possibilities of launching a CBDC (central-bank-digital-currency).
The financial stability’s deputy governor at the BoE (Bank-of-England), Jon Cunliffe, stated that the risks of a progressing crypto market regarding the system of finance are comparatively lesser at the current time; however, they have the potential to expedite with a very fast speed in the case of negligence on behalf of the regulators. During a speech addressing the SWIFT (Society-for-Worldwide-Interbank-Financial-Telecommunication) on 13th October, Cunliffe mentioned that policymakers across the world have just commenced with the development of the framework which is required for the proper regulation of virtual assets. Nonetheless, they should follow it and give it due importance because it is a matter of immediate response.
He then focused the attention on the risks which might be posed by stablecoins and cryptocurrencies in association with the systems of traditional finance via individuals, banks, hedge funds, and financial institutions. As the virtual assets are being persistently run by such institutions, the feeling about crypto volatility could urge the investors to trade other assets being categorized as risky. Cunliffe pointed towards the interrelation between traditional finance and crypto, which is the potentiality of a shock (being transferred via the system of finance) in the case of some mishap.
One of Cunliffe’s presented scenarios was related to the dipping of the price of a crypto asset (which is unbacked) to zero. Moving ahead, the price volatility could activate margin calls on several crypto positions to compel leveraged investors to discover cash to encounter them, even in the prominent cryptocurrencies. This eventually paves the way for the other assets’ trade and produces spillovers for the other markets. At present, the risks for financial stability are comparatively narrow nevertheless have the capability of developing instantly as is expected.
The world of cryptocurrency and blockchain technology is persistently developing and expanding at a high level, said Cunliffe. The extent of the surge of such risks in the future will be determined largely by the supervisory and regulatory authorities’ speed in giving a response. It has been previously argued by Cunliffe that the central bank of England should release public virtual money that can adequately fulfill the requirements of contemporary day-to-day life. By saying this, he signified that the future of BoE is likely a virtual pound. Presently, a task force is being co-chaired by him, which has been arranged by the U.K. authorities to delve deep into the possibilities of launching a CBDC (central-bank-digital-currency).
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