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A former governor of the Bank of England has launched a scathing attack on Liz Truss – accusing her government of turning Britain into “Argentina on the Channel”.

Mark Carney also said Brexiteers such as the former Conservative leader – who became the shortest-serving prime minister in history when she resigned last year – had a “basic misunderstanding of what drives economies”.

It came as the 58-year-old Canadian delivered a speech in which he praised “progressive” policies while attacking “far-right populists”.

Mr Carney’s mention of Argentina – which has become a byword in recent years for countries suffering from repeated economic crises – appeared to be a reference to the economic turmoil that followed the mini-budget drawn up by Ms Truss and her chancellor Kwasi Kwarteng last year.

Speaking at the Global Progress Action Summit in Montreal, the former Bank boss hit out at the “misguided view” that cutting taxes and government spending leads to economic growth – and accused Brexiteers of wanting to “tear down the future”.

He said: “Progressives build things that last – health care, infrastructure, schools, opportunities, sustainability and prosperity.

“Others, and there are others, have a different model. They are in the demolition business. Far-right populists see the anxiety of today as an opportunity to stoke the anger that’s necessary for their project.”

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Truss’ time as PM, one year on

Mr Carney said populists, including Brexiteers, treated spending and tax cuts as a “Pavlovian reaction to every problem” which was “grounded in a basic misunderstanding of what drives economies.”

He added: “It meant when Brexiteers tried to create Singapore on the Thames, the Truss government instead delivered Argentina on the Channel – and that was a year ago.

“Those with little experience in the private sector – lifelong politicians masquerading as free marketeers – grossly under-value the importance of mission, of institutions, and of discipline to a strong economy.”

His comments on Truss were met with laughter – and then applause – from the audience.

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Mr Carney, whose current roles include being the vice chair of Brookfield Asset Management, was replaced by Andrew Bailey as governor of the Bank in 2020 after he stayed on longer than expected due to concerns over potential Brexit disruption to the economy.

Ms Truss has repeatedly defended her time in power since leaving office. She has suggested her economic policies were not given a chance to succeed and believes they would have worked longer-term.

At an event in Westminster earlier this summer, she was overheard comparing sluggish growth in the UK to a “boiling a frog situation”, saying it hadn’t “dramatically gone away” with her exit from Downing Street, but “got worse and worse”.

Ms Truss also said in February she still believed measures such as significant tax cuts were “the right thing to do for Britain” as she doubled-down on her economic ideology.

But also accepted that one of her most controversial measures – cutting the 45p tax rate for the country’s highest earners – was “maybe a step too far”.

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US Federal Reserve Banks say stablecoins could ‘become a source of financial instability’




US Federal Reserve Banks say stablecoins could ‘become a source of financial instability’

The Federal Reserve Banks of Boston and New York published a staff report on Sep. 26 comparing stablecoins, such as USDT and USDC, to money market funds. Key findings in the report include the observation that stablecoins and money market funds follow similar patterns during runs and that stablecoins could inject instability into the broader financial system.

The report, titled “Runs and Flights to Safety: Are Stablecoins the New Money Market Funds?” includes a comprehensive comparison of investor behavior during the stablecoin runs of 2022 and 2023 to investor behavior during the money market fund runs of 2008 and 2020.

Per the publication:

“Our findings show that stablecoins are vulnerable to runs during periods of broad crypto market dislocation as well as idiosyncratic stress events. Should stablecoins continue to grow and become more interconnected with key financial markets, such as short-term funding markets, they could become a source of financial instability for the broader financial system.”

The researchers also note that stablecoins appear to have a discrete “break-the-buck” threshold of $0.99, below which redemptions accelerate and runs — periods in which investors flee, potentially causing an asset crash for remaining investors.

A break-the-buck threshold in money market funds occurs when the net asset value of a fund drops below a dollar, this can lead to investor shares, valued at $1.00, to dip below market price and cause investors to seek safe harbor elsewhere.

Image credit: Anadu, et. al., 2023

As Cointelegraph recently reported, Italy’s central bank is also taking measures to identify contributing factors and prevent stablecoin runs. In a recent statement, the Italian banking authority cited the 2022 Terra Luna collapse as an example that stablecoins “have not proved stable at all.”

According to the report, Italy has also called upon global lawmakers to form an international regulatory body to govern cryptocurrency, stablecoins, and related technologies.

Related: ‘It’s going to get worse for banks’ — JPMorgan CEO on overregulation