Cunliffe spoke at the London School of Economics about digital currencies, including stablecoins and central bank digital currencies (CBDCs). Speaking specifically about stablecoins, he says that increased issuance and supply of stablecoins might dent the credit system. He also said that with the integration of many platforms, such as crypto with social media, the risk of this happening is a lot higher.
“In such a world, and depending how and whether stablecoins were backed with other financial assets, the supply of credit to the real economy through the banking system could become weaker or indeed disappear. That would be a change with profound economic consequences.”
His speech suggests he believes that a future like that is inevitable because of the advantages of stablecoins including much cheaper cross-border transactions as well as financial inclusion.
Image Credits: Pixabay
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