LONDON – Digital currency rise may lead to drying up of credit flow into the broader economy according to Bank of England Deputy Governor Jon Cunliffe.
Cryptocurrencies have had central banks grappling for their economies. The Bank of England warned that Facebook’s Libra and other payment forms may pose risks which must be considered before getting the go-ahead.
Cunliffe said that the so-called stable coins which are linked to big tech and social media platforms may lead to people shifting their money from bank accounts to non-bank firms’ virtual wallets.
“In such a world, and depending how and whether stablecoins were backed with other financial assets, the supply of credit to the real economy through the banking system could become weaker or indeed disappear. That would be a change with profound economic consequences.”
– Jon Cunliffe, Bank of England Deputy Governor
It must be ensured by authorities that stablecoins used as money must meet commercial bank money standards and pass tests like competition, data protection and anti-money laundering.
(Photos syndicated via Reuters)
This story has been edited by BH staff and is published from a syndicated field.