Home Bank Of England Bank Of England Worried About U.K. Banks’ Involvement With Cryptocurrencies

Bank Of England Worried About U.K. Banks’ Involvement With Cryptocurrencies

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Just as the United States pumps money out of the United States Federal Reserve Bank – its name commonly shortened to nothing more than “the Fed” – a federal organization that also changes current standards of monetary policy to keep the value of the United States Dollar as objectively high as possible, the United Kingdom has the Governor and Company of the Bank of England – this organization is far more often referred to as the Bank of England – the central bank of Great Britain and Northern Ireland.

Recently, just two days ago – this took place on Thursday, June 28, 2018 – the Bank of England’s head executive, the deputy governor, warned financial institutions across the United Kingdom that cryptocurrencies, tokens, and other digital stores of value are inherently risky and that such banks should generally limit their exposure to cryptocurrencies – digital currencies that are secured by mathematical formulas.

Sam Woods, the chief executive officer of the United Kingdom’s very own PRA, or the Prudential Regulation Authority, a regulator of all things related to the proffering of financial services within the country’s borders, wrote in an open letter that insurance contract providers, investment and portfolio management organizations, financial institutions, and investment advisers should take seriously the many steps such organizations around the world take to cover for potentially-heavy drops in various cryptocurrencies’ value and investments in new digital assets – including cryptocurrencies – and organizations responsible for issuing brand-new initial coin offerings.

Investment advisers and portfolio managers have a fiduciary duty to their many clients to act in their best interest. Since the general purpose of investing is to grow one’s wealth over long – or relatively short periods, sometimes lasting just months – stretches of time or protect against the constant threats of losing monetary value due to inflation, investment advisers and portfolio managers should generally stay away from financial instruments and other assets that the price of often fluctuates wildly.

Cryptocurrencies are notorious for having a sky-high volatility of price. Further, because cryptocurrencies, tokens, and other digital currencies can be exchanged for money or other stores of value relatively easy, the Bank of England felt obligated to inform its many financial institutions that investing in currencies used to purchase things – cryptocurrencies are essentially like fiat money, though with a handful of obvious differences – is a bad idea because investors interested in cryptocurrencies typically act with textbook misconduct and a lack of integrity.

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