Fast-growing crypto-currency is now considered a threat to the financial system. Despite, much of UK household’s wealth is currently held in Bitcoin, they are becoming more mainstream. Deputy Bank governor sir Jon Cunliffe. Says, ‘’if their value fell sharply, it could have a knock-on effect.’’

He also added, ‘’ the bank needed to be ready to contain those risks. In a talk with BBC, Sir Jon said that at present, about 0.1% of UK households’ wealth was in crypto-currencies.

It is estimated that about a 2.3million people hold crypto-currencies, with an average amount per person of about £300.

Crypto-currency growing very fast

He believes that crypto-currencies are growing very fast with people such as fund managers wanting to know whether they should have part of their portfolios in Digital Currencies.

Sir Jon said, ‘’ their prices can vary quite considerably and they could theoretically or practically drop to zero.’’  He says the point of worrisome is the integration of cryptocurrency into the financial system. The price correction could affect other markets and affect reputable financial market players.

He added, ‘’ We need to roll our sleeves up and get on with it, so that by the time this becomes a much bigger issue, we’ve got the regulatory framework to contain the risks.’’

He was speaking the day after the Bank of England published its latest financial stability report. In this report, the bank has examined the health of the UK’s financial system. According to the reports, the UK households remain ‘’resilient’’ despite Covid support measures and leave scheme. Though, uncertainty over economic outlook remains the same. Also, Covid could have a greater impact, specifically in the emergence of the new variant.

Interest Rate

Also, the report comes as bank policymakers prepare to announce their future interest rate decision. Analysts predict an increase in interest rates amid a surge in inflation. Also, the cost of living in October rose by 4.2%. Meanwhile, the spread of the new variant has brought fears about the situation.

The Bank said, ‘’ The UK and global economies have continued to recover from the effects of the pandemic. But uncertainty over risks to public health and the economic outlook remains.’’

For example, there is near-term pressure on supply and inflation, and there could be a greater impact from Covid on activity, especially given uncertainties about whether new variants of the virus reduce vaccine efficacy. ‘’