Are Stablecoins Going to See Bank Credit Weakened?

The deputy governor for the financial stability of the Bank of England, Jon Cuncliffe has warned that the emergence of a new crypto economy could see bank credit issuance significantly impacted and could result in it being weekend.

In a speech delivered to the London School of economics on the 28th of February last week, the governor predicted that the integration of stablecoins on social media platforms is where he can see more people putting their money. He further said:

“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.“

Bank of England’s role has always been to ensure the United Kingdom and its financial currency is able to work at a reliable and safe rate. This is where he said that cryptocurrencies indicate many questions for the government and regulators, as well as the bank itself.

The deputy governor encouraged lawmakers and central banks to get ready for the new never seen before challenges that digital currencies pose.

An official from the Bank of England made it very clear that the current financial system is comprising “the equivalent of 18th-century bank clerks with quill pens altering their banks’ ledgers to debit one account and credit another.”

New currencies such as stablecoins make claims to offer several benefits including reductions in the cost of payments when it comes to cross-border finances. This is just one of the many benefits that stablecoins have to the rest of the world.

It will be interesting to see how this plays out. For more news on this and other crypto updates, keep it with CryptoDaily!