Cryptocurrencies a ‘fundamental issue’ for Bank of England, official says
Sir Jon Cunliffe said new currencies and ways of paying for things are ‘exciting’ but also a ‘fundamental issue’ for the Bank.
The Bank of England’s deputy governor said stablecoins may need the same regulation as traditional payments in order to prevent threats to Britain’s financial stability.
Sir Jon Cunliffe said new currencies and ways of paying for things are “exciting” but also a “fundamental issue” for the Bank.
The Bank and the UK’s regulator, the Financial Conduct Authority, are set to consult later this year on a new regulatory framework to limit the use of stablecoins, which are a type of cryptocurrency backed by traditional money or assets.
Payment systems using stablecoins “should be regulated to standards equivalent to those applied for traditional payments”, Sir Jon told an audience at the Innovate Finance Global Summit in London’s Guildhall.
We cannot know for certain the extent and the speed at which payment stablecoins might be adopted and we may well need limits... to ensure we avoid disruptive change that could threaten financial stability
He stressed that the financial stability risks of the rapid and disruptive development of digital money should be “manageable”.
“But we cannot know for certain the extent and the speed at which payment stablecoins might be adopted and we may well need limits, at least initially, to ensure we avoid disruptive change that could threaten financial stability”, the banker stressed.
Sir Jon warned in December that the crypto industry, which is largely unregulated in the UK, is “too dangerous” not to be regulated in the same way other financial institutions are.
It comes as the Bank develops its own plans to launch a digital pound which can be used by private sector companies across the country.
Sir Jon said in his speech on Monday: “Changes in how we pay for things and what type of money we use is an exciting area of possibility for the fintech world.
“It is also a fundamental issue for the Bank of England – as a regulator, as the provider of the central high value payment rails and the issuer of the highest quality, public money in the UK.”
The Bank aims to develop both the regulatory frameworks and the public money that means “safe innovation can flourish to the benefit of all”, he concluded.