Bank of England’s Financial Policy Committee said that stablecoins closely monitor the risks of the United Kingdom economy. At its meetings on 4 and 8 April, the Committee evaluated the financial risks that stablecoins could create by growth activities in the market.
Stablecoin Risks
The report revealed that the Stablecoin market is expanding rapidly and the risks that may occur if the quality of support assets are insufficient. The Financial Policy Committee stressed that stablecoins, which were issued with inappropriate guarantees in the increasing market, may harm the basic financial markets.
Financial Policy Committee (FPC): “Non -pound stablecoins supported by inappropriate guarantees may be exposed to sudden sales of support assets, this situation may affect the Basic Financial Markets of the United Kingdom.”
Regulatory studies and economic effects
Authorities, foreign currencies expressed in the increase in stablecoins, economies may increase the risk of exposure to money change, he said. Regulatory institutions continue to work on new audit mechanisms to be developed for these assets.
Financial Policy Committee (FPC): “Even if appropriate regulation, the increasing use of stablecoins in foreign currencies may make some economies vulnerable against money change and other macro financial effects.”
The Committee pointed out that the increase in use of stablecoins in cross -border payment transactions can increase the risks on both individual and corporate financing. This change in payment systems is likely to cause uncertainties in areas such as credit risk and market volatility.
Financial Policy Committee (FPC): “The use of stablecoin in individual transactions may lead to the preference of households and small enterprises in cross -border payments of small enterprises, and in wholesale transactions, the reconciliation that occurs outside the Central Bank’s money may increase the liquidity control by increasing the opposite party loan risk.”
The report argued that robust collateral structures and improved regulatory frameworks were needed to reduce financial risks. It is important to follow the existing studies and market dynamics closely and to prevent possible negative effects.
Financial institutions and regulatory authorities have decided to continue to prepare forward reports by following the developments in the Stablecoin market. The monitoring is thought to be beneficial for the overall stability of the financial system.
Responsibility Rejection: The information contained in this article does not contain investment advice. Investors should be aware that crypto currencies carry high volatility and thus risk and carry out their operations in line with their own research.
