The Bank of England has expressed concern about the rapid rise in cryptocurrencies. They believe that there are risks associated with this market, which could lead to a financial crisis like 2008’s sub-prime mortgage situation.
The recent report by The Bank of England (BOE) was released last week and outlined many concerns they have regarding growing crypto markets. The risks associated with cryptocurrencies are a real concern as we witness growth in this new market space that could have implications for the economy at large- especially if people start using them instead of traditional currency, at least that’s what they think.
The British Financial Services Authority (BOE) has indicated that they do not believe the cryptocurrency market currently poses any significant risks to U.K.’s financial stability.
The crypto market is currently worth more than $2.2 trillion, which has decreased by almost 800 billion from its recent highs in November 2021! Despite the correction, digital currencies are on a roll. Over 200% growth in just 11 months as people continue to catch onto this new and exciting way of doing business with each passing day.
Cryptocurrencies might be the future of finance but they’re also creating a problem for banks. The UK’s financial system is in good hands. The country’s bank has created a committee to ensure stability when it comes to digital currencies like Bitcoin and Ethereum, which can be risky due to their anonymous nature or because hackers might steal them from people through malware infections on computers that have been hacked into—similar threat actors exist for traditional banks too though!
BOE notes, “Markets and activities related to cryptocurrencies continue to grow and develop rapidly. Crypto assets currently pose limited direct risks to UK financial stability. However, they will present a number of financial stability risks if they continue to grow at their current rapid pace, and as they become more interconnected with the wider financial system.”
Andrew Bailey’s Take on Cryptocurrencies
In recent months, the Governor of the Bank of England, Andrew Bailey, has been vocal about his opinions on Bitcoin and other digital currencies. At a recent event hosted by the Cambridge Student Union, Bailey expressed his worries regarding El Salvador’s decision to legalize Bitcoin as legal money.
“It concerns me that a country would choose it as its national currency. What would worry me most of all is, do the citizens of El Salvador understand the nature and volatility of the currency they have,” said Bailey at the event.