The Bank of England (BOE) recently released its financial stability report and outlined the risks associated with the growing crypto market. The BOE mentioned that the crypto assets currently pose limited risks to the financial stability of the United Kingdom.
The crypto market currently has a value of more than $2.2 trillion, which is down by almost $800 billion from the recent highs in November 2021. Despite the correction, the overall market capitalization of digital currencies has jumped by over 200% in the first 11 months of 2021.
Regarding the future of cryptocurrencies, BOE highlighted that its rapid growth will create issues for the financial system. According to the bank, its Financial Policy Committee is working to ensure the stability of the UK’s financial system from risks associated with digital currencies.
“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,” BOE noted.
Andrew Bailey on Cryptocurrencies
The Governor of the Bank of England, Andrew Bailey, remained vocal about his views on Bitcoin and other digital currencies in the last few months. At a recent event organized by the Cambridge Student Union, Bailey expressed his concerns about El Salvador’s adoption of Bitcoin as legal tender in the country.
“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,” Bailey said at the event.
The crypto market cap has dropped by more than $100 billion in the last 24 hours. Bitcoin lost nearly 5% of its value.
