Incoming BoE Deputy Governor Discusses Crypto's Value and Risks
The incoming deputy governor of financial stability at the Bank of England (BoE) has said that crypto does not yet pose much of a risk to financial stability.
During a hearing held by Parliament's Treasury Committee, Sarah Breeden, set to assume her new role on November 1, discussed the value and risks associated with cryptocurrencies.
Breeden emphasized the potential benefits of the underlying technology while also cautioning about the risks posed by cryptocurrencies.
"Crypto is an asset that has no intrinsic value, whose price could go to zero and therefore investors should be prepared to lose all of their money," Breeden said.
"That megaphone about the risks in it has been consistent and very clear. However, that technology, I think has got the potential to bring benefits to the financial system."
She also acknowledged the potential of the underlying technology to bring benefits to the financial system.
Specifically, she opposed the BOE's comparison of crypto to gambling, suggesting that it should be treated as a financial activity instead.
As part of her responsibilities, Breeden will play a crucial role in shaping the UK's regulatory approach to cryptocurrencies and will contribute to the decision-making process regarding the issuance of a central bank digital currency (CBDC).
At present, Breeden does not believe cryptocurrencies pose any major risk to financial stability.
However, she expressed concerns about the potential risks if cryptocurrencies become more interconnected with the broader financial world, particularly if stablecoins are used for payments.
Breeden underscored recent events that have highlighted the risks within the sector.
The decline in crypto prices, for example, played a role in the failure of two US
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