The G20 Financial Stability Board (FSB) has published an analysis of the potential future implications on the financial stability of the cryptocurrency market.
The 21-page report analyses the assessment of primary risks in crypto assets and their markets, in particular, low liquidity, leverage, volatility risks and operational risks. On the basis of these characteristics, the FSB establishes that crypto assets lack the key attributes of sovereign currencies and are not a common means of payment, a stable store of value or a unit of account.
Therefore, the report concludes that to date they do not pose a real risk to global financial stability.
However, the report adds that vigilant monitoring is needed because due to the high speed of this market’s development there may be implications for financial stability in the near future.
These implications could include: effects on confidence and reputational risks for financial institutions and their regulators, risks arising from direct or indirect exposures of financial institutions or from the anonymity of the operation of activities using cryptocurrencies as a means of payment and risks arising from a growth in market capitalisation.
In addition, the FSB stresses that the use of crypto assets raises a number of general policy issues, such as the need to protect consumers and investors, anti-money laundering and the fight against terrorist financing, the possibility of circumventing international sanctions, regulatory measures to prevent tax evasion, the avoidance of capital controls and the control of offers of illicit securities.
Finally, the report stresses that the actions taken by the FSB are balanced between preserving the benefits of innovation on the one hand and containing risks on the other.
To tell the truth, this report does not add anything new to what was already known about cryptocurrencies, but from time to time it is necessary to update global knowledge, in particular on the issue of the risks arising from the possible impact of their use on the global financial system. The central and relevant fact of this analysis is that crypto assets do not yet represent a real risk to global financial stability.
In the future, other analyses such as this can be conducted at more or less regular intervals, and will probably lead to the same conclusions as long as the spread of these technologies is still limited.
In other words, this report is not to be considered definitive, but only a snapshot of the current situation that will need to be updated over time, especially if the mass adoption of cryptocurrency were to become a reality.
