Bank of England Deputy Governor Warns Crypto Prices Could Fall to Zero
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- 15 Dec 2021
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Bank of England’s Deputy Governor Warns Crypto Prices Could Tank to Zero
Sir Jon Cunliffe, Bank of England’s deputy governor for financial stability, warned about cryptocurrencies becoming worthless Tuesday on the BBC’s Today program.
Cunliffe began by acknowledging that cryptocurrencies have been “growing very fast,” and are becoming mainstream. He stressed that at this growth rate, they could pose a danger to the established financial system even though only about 0.1% of U.K. households’ wealth is currently in cryptocurrencies. Approximately 2.3 million people in the U.K. are estimated to hold cryptocurrencies, each holding an average amount of about 300 British pounds ($397).
The Bank of England executive further pointed out that financial professionals, such as fund managers, want to know whether cryptocurrencies should be part of their portfolios.
The deputy governor warned that if the value of cryptocurrencies fell sharply, it could have a knock-on effect, emphasizing that the Bank of England needs to be ready to contain those risks. He stressed:
"Their price can vary quite considerably and they could theoretically or practically drop to zero."
“The point, I think, at which one worries is when it becomes integrated into the financial system — when a big price correction could really affect other markets and affect established financial market players,” Cunliffe opined.
This is not the first time the Bank of England deputy governor has warned about cryptocurrencies losing their value. In October, Cunliffe said that crypto could collapse, urging regulators to act fast to establish a regulatory framework for them.
“It’s not there yet, but it takes time to design standards and regulations,” he additionally told the BBC. “We really need to roll our sleeves up and get on with it, so that by the time this becomes a much bigger issue, we’ve actually got the regulatory framework to contain the risks.” Read More…
