- FSB highlights the potential of crypto-assets in the near future.
- The new report also shows things hindering cryptocurrencies at the moment and possible solutions.
The FSB, Financial Stability Board had in a recent statement, dated October 10, 2018, released in its publication, which contained a detailed assessment of the potential of crypto-assets when it comes to financial stability in the future.
Potentials Of Crypto Assets For Future Financial Stability
A look into the potential of cryptocurrency and its use in the crypto space presently, reveals a more positive indication. Though this may not be so conspicuous at the moment, the potential it has shown over the years has demonstrated that it can only continue to get better despite the bearish trend.
The report reveals the non-viability of crypto-asset for financial stability at the moment.
The FSB’s latest report is built upon an assessment of crypto assets potential for same cause published in July. This contained the FSB Chair’s March 2018 letter to the G20 Finance Minister and Central Bank governors and a synopsis of the work by FSB and standard-setting bodies on crypto assets.
Primary risks of the cryptocurrency assets and its markets were a feature of the publication of FSB.
This was noted as low liquidity, the use of leverage, market risks from volatility, and operational risks. This feature reveals the complicity and non-viability of crypto asset as a sovereign currency. Also, it neglects to feature basic functions of a currency as a convenient means of payment, a stable store of value, or a mainstream unit of account.
The Potency Of Cryptocurrency As A Change Agent And Implications
The inherent weaknesses of cryptocurrencies do not make it a threat to global financial stability at the moment. However, it holds great potential as a change agent.
The speedy growth that has trailed the cryptocurrency market makes it a potent tool in the future.
Crypto asset’s wide usage and fulfilling its importance for financial stability will attract cross-border policy issues. These include the need for consumer and investor protection, strong market integrity protocols, anti-money laundering and combating the financing of terrorism (AML/CFT) regulation and supervision – including implementation of international sanctions, regulatory measures to prevent tax evasion, the need to avoid circumvention of capital controls, and concerns relating to the facilitation of illegal securities offerings.
FSB facilities and coordinates at the international level the work of national authority in overseeing the effective regulatory, supervisory and other financial sector policies in the interest of financial stability. The FSB is chaired by Mark Carney, Governor of the Bank of England.