The Bank of England has recently published the October editions of its “Financial Stability in Focus” report. In this month’s edition, they’ve talked briefly about crypto-assets and their effect on the financial situation in the UK.
The Financial Policy Committee consists of 13 members, six from the Bank of England that includes the governor and four deputy governors. Moreover, the purpose of FPC is to identify, monitor, and take action to remove systemic risks. This is to protect and enhance the resilience of the UK from violent runs in crypto-assets.
The committee wrote:
“Cryptoasset and associated markets and services continue to grow and develop rapidly. Such assets are becoming increasingly integrated into the financial system. The FPC judges that direct risks to the stability of the UK financial system from crypto assets are currently limited.”
They further said:
“However, regulatory and law enforcement frameworks, both domestically and at a global level, need to keep pace with developments in these fast-growing markets in order to manage risks and to maintain broader trust and integrity in the financial system.”
The committee further noted that it would pay close attention to the crypto assets and UK financial system developments. They’ll aim to seek resilience to systemic risks potentially arising in the further development of crypto markets.
In the end, the FPC advised other financial institutions to take a cautious stance while approaching such assets.
Earlier this month, the International Monetary Fund (IMF) had warned about the rising popularity of cryptocurrencies. Moreover, they said that cryptocurrencies pose new challenges to financial stability and could reduce the effective implementation of central bank policy.