Deputy Governor of the Central Bank John Cunliffe told what advantages digital coins have, and why they can harm financial stability

The development of the digital industry can become a threat to financial stability and the banking system as a whole, said the Deputy Governor of the Central Bank of England John Cunliffe in a letter to students of the London school of Economics. One of the prerequisites for this, he called the possible introduction of stablecoins, such as the Facebook Libra cryptocurrency, into social networks.

If people use this payment system and store money in it, then banks may have a lack of liquidity, Cunliffe explained. He believes that in this case, companies will not have enough capital to issue loans, which is why this area may significantly weaken or disappear altogether.

"In such a world ... the supply of loans for the real economy through the banking system may become weaker or even disappear. This will have profound economic consequences, " Cunliffe said.

He added that digital coins have a number of advantages, for example, significantly reduce the cost of payments, especially cross-border ones, and offer greater financial accessibility due to simplicity and cost-effectiveness in use. However, there are also risks that need to be addressed and prevented before they have a serious impact on the entire system, Cunliffe said. He said that because of the scale of Facebook, the spread of Libra can happen very quickly.

18 Dec criticism of cryptocurrency was made a member of the Federal reserve Board Governor Lael Brainard speak. She believes that the existing monetary system has its advantages, and the use of Libra stablecoin can put consumers at risk.