The Strategist

Bank of England foresees global crisis of 2008 levels due to rise of cryptocurrencies

10/15/2021 - 06:51

The world may face a new financial crisis comparable to the 2008 collapse, the deputy governor of the Bank of England warned. The cause will be the uncontrolled growth of cryptocurrencies, whose market reached $2.3 trillion in just a few years.
The world may face a new financial crisis comparable to the collapse of the global economy in 2007-2008, said Deputy Governor of the Bank of England, Jon Cunliffe. This is reported by CNBC.

He believes that the crisis will be caused by the rapid growth of the cryptocurrency market, which increased from $16 billion to $2.3 trillion just in five years. Similar rates, as noted the Deputy Governor of the Central Bank, the U.S. mortgage market grew, reaching $1.2 trillion by 2008. 

"When something in the financial system is growing very fast and in a largely unregulated space, financial regulators should wake up and take notice," Cunliffe said. He recalled that most cryptocurrencies "have no real value" and are vulnerable to major market adjustments. Over the past five years, for example, bitcoin has fallen 10% in one day nearly 30 times, the expert recalled.

Cunliffe acknowledged that so far the risks from the growth of digital currencies are small, and cryptotechnology may even bring "radical improvements" to financial services. However, the more cryptocurrencies are "integrated into the traditional financial sector," the more they could destabilize global economies, the deputy head of the UK regulator said.


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