The global financial regulator has published a framework for monitoring the risks from “crypto-assets” such as bitcoin to financial stability, as watchdogs increasingly circle the rapidly evolving digital currency marketplace.
The Financial Stability Board, the group of policymakers and regulators that makes recommendations to the G20, said on Monday that while crypto-assets “do not pose a material risk to global financial stability at this time”, it endorsed “vigilant monitoring” of crypto markets due to both the speed of developments and current lack of data.
It said that its new framework, developed together with the Committee on Payments and Market Infrastructures, identified metrics for monitoring cryptocurrencies proper as well as crypto-derivatives.
“Monitoring the size and growth of crypto-asset markets is critical to understanding the potential size of wealth effects, should valuations fall,” the FSB said. “The use of leverage, and financial institution exposures to crypto-asset markets are important metrics of transmission of crypto-asset risks to the broader financial system.”
The framework, which will be delivered to the G20 ahead of their meeting this weekend in Buenos Aires, includes metrics on confidence, trading volumes, pricing, and settlements, according to the report.
It comes several months after Mark Carney, the chair of the FSB and the governor of the Bank of England, said in March in a letter to the G20 that crypto-assets could pose risks to financial stability if they became more widely used “without material improvements in conduct, market integrity and cyber resilience”.
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