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During a speech at the Warwick Business School’s Conference on DeFi and Digital Currencies on Monday, the Bank of England’s Deputy Governor for Financial Stability Jon Cunliffe announced that the country’s central bank was seeking to develop and deploy a “digital pound.”
Cunliffe reflected on the recent developments in the cryptosphere, breaking down the FTX implosion, and how it illustrated the need for more regulation of the digital currency ecosystem.
“I thought it might be worthwhile to start with a brief look at the FTX implosion,” Cunliffe began, “to frame some of the points I intend to make on regulation of the use of crypto-related technologies to provide financial services and on why, as a central bank, we are actively exploring the issuance of a digitally native pound sterling.”
He pointed out that over the past year, the crypto ecosystem has shown itself to be incredibly unstable, due to the fact that “its foundation is completely unbacked instruments of extreme volatility that can swing wildly in value,” and because it exists in “largely unregulated space” despite being prone to the same risks that regulations in the regular financial sector were set up to mitigate.
Cunliffe went on to highlight three main reasons why more regulation is necessary, two of which were centered around protecting those using crypto and financial stability at large. The third, however, focused on how the technologies pioneered and used by the cryptosphere could “foster innovation” if brought under the regulatory umbrella.
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