BANK OF ENGLAND WARNS DIGITAL CURRENCIES COULD THREATEN BANKS' STABILITY

The Bank of England (BoE) has warned that a large-scale shift to digital currencies could risk undermining Britain's banks (The Telegraph). The BoE said that lenders may have to find new ways to cope with fewer customer deposits if a central bank-issued digital currency proved to be popular with households.

The BoE suggested that the introduction of any currencies would need to be tightly controlled to avoid disruption at commercial banks (The Times, £). In a paper released yesterday on new forms of digital money, the BoE said it has not decided on its regulatory approach to stablecoins - a cryptocurrency tied to government-backed currencies. However, it warned that companies offering stablecoins should not enjoy "regulatory arbitrage" through looser rules than those required of banks (Financial Times, £). 

Andrew Bailey, governor of the BoE, said that the prospect of stablecoins as a means of payment has generated a host of issues that central banks, governments, and society as a whole need to carefully consider and address.

HOUSE PRICES ROSE 9.5 PER CENT IN THE YEAR TO MAY

House prices rose 9.5 per cent in the year to May according to Halifax's House Price Index. The rise in house prices was boosted by the stamp duty holiday, and buyer preferences shifting "in anticipation of new, post-pandemic lifestyles", according to Halifax (BBC News).

The average house price is up £22,000 to £261,743, with annual house price inflation at its strongest level in nearly seven years, rising 1.3 per cent month on month. According to Halifax, Wales has seen the fastest rate of growth over the past year, closely followed by the North West and the Yorkshire and Humber region (Daily Mail). Russell Galley, Managing Director at Halifax, warned that house prices could be pushed even higher across the country as lockdown restrictions have led to a bigger savings build-up for homebuyers.

NEWS IN BRIEF

Boris Johnson has called for a partnership between the government and Britain's financial services sector in the post-Brexit, post-Covid-19 economy (Financial Times, £).

Kate Nicholls, Chief Executive of Hospitality UK, told the Treasury Select Committee that retail and leisure firms are facing huge levels of debt as the economy reopens (BBC News).

The lifting of lockdown restrictions is set to be delayed by a fortnight as ministers are increasingly pessimistic after a "downbeat" briefing from Chris Whitty and Sir Patrick Vallance (The Times, £).

UK retail sales saw the highest surge in May since the start of the coronavirus pandemic, according to the British Retail Consortium (The Guardian).

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