The Bank of England, on the other hand, has stated that crypto poses insufficient dangers to warrant intervention beyond present surveillance. Nevertheless, in its Financial Stability Report (FSR), the central bank stated that:
“there is a level of risk in the Price volatility in certain crypto assets that could highlight potential pockets of exuberance.”
The study goes on to say that the crypto industry is mostly composed of retail investors, with institutional investors becoming more involved as time goes on. The FSR acknowledges that bitcoin uptake has been quite strong this year.
As per the FSR, there are indicators of rising crypto interest from major payment system operators and banks, with the goal of improving interconnections between conventional financial organizations and cryptos. Andrew Bailey, governor of the Bank of England, reiterated his view that cryptocurrency has no inherent value and warned investors that they risk losing their whole investment.
“From an institutional standpoint, the data does not indicate to it becoming a significant part of the equation, but we must continue to monitor it closely since it is a rapidly evolving domain.”
In spite of reports that the Bank of England will remain passive beyond tracking crypto-assets, deputy governor Jon Cunliffe stated that the bank is closely watching the marketplace for any potential steps to safeguard ordinary investors.
“From the standpoint of financial stability, the time at which you react is when you realize that you do have a danger that is starting to precipitate.”
It was lately revealed that young individuals in the United Kingdom aged 18 to 35 had made significant investments in Bitcoin. Intriguingly, rising inflation in the United Kingdom may push several other institutional investors to embrace Bitcoin as an inflation hedge.
As per a latest announcement by ONS deputy national statistician Jonathan Athow, inflation has risen for fourconsecutive months, reaching its highest level in three years. Inflation rose to 3% in 2021 before falling underneath the 2% goal. Paul Dales, the chief UK economist at Capital Economics, has cautioned that inflation might reach 4% by the end of the 2021.
“We believe the current rise in inflation is only transitory, therefore the Bank of England will not tighten policy in responding.” This may fuel appetite for Bitcoin and other strong altcoins, particularly among institutional investors.