Jon Cunliffe, the deputy governor for Financial Stability at the central bank of England, the Bank of England (BoE), has said cryptos’ mass adoption can weaken or eliminate bank credit issuance.
He said on Friday during a speech at the London School of Economics that the integration of stablecoins in social networks could lead to a large number of users investing their funds in these currencies instead of keeping them in banks. According to him:
"In such a world, and depending how and whether stablecoins were backed with other financial assets, the supply of credit to the real economy through the banking system could become weaker or indeed disappear. That would be a change with profound economic consequences."
Cunliffe has said virtual currencies raise "very important questions" for the UK government, regulators and the Bank of England.
The country's central bank has urged regulators and central banks to prepare before the crypto ecosystem gains more popularity.
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