Bitcoin poses increasing risk to financial stability, warns Bank of England’s Sir Jon Cunliffe

Joseph B. Hash

“Our lives are becoming more digital. As that happens, the way we use money and the money we hold changes,” he said.

“The question is whether the public at large, businesses, households, should have the option of holding the safest form of money, which is Bank of England money in their everyday lives.”

He said this is “very different” to Bitcoin.

“Bitcoin is an asset that can go up in price, it can go down in value to zero,” he said.

“We are talking about issuing something that is stable, it is safe, that people can trust, that can anchor and hold together our monetary system.”

The Bank and the Treasury are consulting on the possible uses of a central bank digital currency, which could potentially lower transaction costs and speed up payments.

However it also has the potential to undermine the financial system as there is a possibility that in a recession or financial crunch households and businesses may prefer to keep their cash risk-free at the Bank of England, pulling their funds out of commercial banks.

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