The Bank of England (BOE) recently made its financial stability report public and highlighted a growing crypto market’s risks. However, the BOE added that the crypto assets pose limited risks to the financial stability of the UK currently.
The crypto market is worth about $2.2 trillion currently, down by nearly $800 billion from the recent levels in November 2021. The overall market cap of digital currencies went up by over 200% in the first 11 months of the year despite the correction.
Talking of the future of cryptocurrencies, BOE outlined that its accelerated growth will create problems for the financial system. According to the bank, its Financial Policy Committee is taking necessary measures to ensure the stability of the UK’s financial system from risks that digital currencies bring to the table.
Markets and cryptocurrency activities continue to grow and develop at a fast pace. Crypto assets do not pose many risks to UK’s financial stability as of now. However, they will create numerous financial stability risks if they go on to grow at their current speed and become a more integral part of the broader financial system, noted the BOE.
Andrew Bailey’s stance on Cryptocurrencies
Andrew Bailey, the Governor of the Bank of England, voiced his opinions on Bitcoin and other digital currencies in the last few months. Bailey voiced his concerns about El Salvador’s decision to make Bitcoin a legal tender in the country in an event organized by the Cambridge Student Union. He is concerned that a country would choose crypto as a national currency. Furthermore, he is worried if the citizens of El Salvador are aware of the nature and volatility of the currency they hold.
The cryptocurrency market capitalization has dragged down by more than $100 billion in the last 24 hours. As a result, Bitcoin dropped 5% of its value.