Jon Cuncliffe, the deputy governor for financial stability of the Bank of England (BoE) has warned that the increasing growth of the crypto economy may weaken or eliminate bank credit issuance. He said this while delivering a speech at the London School of Economics on February 28.

Cuncliffe said the role of the BoE is to ensure that the UK’s money works safely and reliably. The BoE official predicted that the integration of stablecoins on social media platforms (such as the Libra project) could lead to people investing much of their funds which are currently held with banks, into stablecoins.

The BoE official acknowledged the numerous benefits stablecoins offer, including largely reduced payments costs, especially cross-border payments. They also offer greater financial inclusion via easier and cheaper access to payment services for people without bank accounts.

Cuncliffe however claims that virtual currencies pose critical questions for the UK government, regulators and the BoE. He urged regulators and central banks to prepare for the unique challenges associated with the emerging crypto industry before it becomes “systematically important”. He further warns that Facebook’s large size will give its proposed Libra stablecoin a wider adoption.

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