Financial Stability Board Believes Crypto Assets Pose No Material Risks To International Financial Stability

The global Financial Stability Board (FBS) released a report yesterday with the group stating that cryptocurrencies such as Bitcoin and Ethereum do not yet pose any risk to the global financial stability through careful monitoring of the industry is needed.

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The global Financial Stability Board (FBS) released a report yesterday with the group stating that cryptocurrencies such as Bitcoin and Ethereum do not yet pose any risk to the global financial stability through careful monitoring of the industry is needed.

The FBS is an international group that is made up of 68 local institutions such as central banks, watchdogs, and ministries of finance. The group is responsible for coordinating financial regulations for the G20 economies.

Report concludes currently little risk to financial stability

According to the reports, the FBS stated that the information available to them has led to the conclusion that crypto assets do not pose a material risk to global financial stability at this time. Despite that, there is a need to monitor the space in light of the speed of market developments.

The report drafted by the organization is 17 paged and it was accompanied by a statement on the rapidly evolving digital currency market.

According to FBS, the size of the cryptocurrency market is still relatively small at the moment which is why they don’t think it poses any risk to the current global financial stability.

Even though the prices of cryptos is much higher than previous financial bubbles, the total market cap is much lower than those bubbles like the dotcom crash or the subprime mortgage crisis.

The group also warned about price manipulation in the market and its effect on the performance of the general market. FBS stated that price manipulation has been made easy due to situations like lack of liquidity, concentrated ownership, and fragmented market structure.

The group stated that if cryptocurrencies continue to evolve, it could have implications for financial stability in the future.

It could cause some implications like risks arising from direct or indirect exposures of financial institutions, risks arising if crypto-assets became widely used in payments and settlement.

Vigilant monitoring is needed to protect investors

The report also reiterated the statement that the group mentioned back in March. The group stated that it is important to protect consumers and investors.

This is the same claim that was made by the European Union last week as it stated that fraudulent projects and the monetary risks posed by speculation on cryptos issued by ICOs have so far been ineffective.

Andrea Enria, chairperson of the European Banking Authority stated that the consumer working programs are not working as expected.

She added that consumer warnings don’t seem to be sufficiently effective in raising awareness among consumers that there is a lack of safety net for these investments.

The IMF recently stated in its World Economic Outlook Report that the rapid growth of cryptos could create new vulnerabilities in the international financial system.

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