It is very important for the banking industry to understand how cryptocurrencies can influence their activities. Of course, it is very difficult to measure which are the direct and indirect effects on banking services. But these financial institutions are worried about their exposure to the virtual currency market.
Cryptocurrency Influence in the Banking Industry
The Financial Stability Board (FSB) will be presenting a document to the Finance Ministers of the G-20 group so as to warn about the possible risks associated with virtual currencies and the banking sector. The meeting will take place between July the 21st and the 22nd in Buenos Aires, Argentina, the country that this year worked as head of the G-20.
In sum, the document says that cryptocurrencies or digital assets do not pose a real risk to financial stability.
The document reads as follows:
“While the FSB believes that crypto-assets do not pose a material risk to global financial stability at this time, it recognises the need for vigilant monitoring in light of the speed of market developments.”
Even though the document explains that there are currently no risks associated with virtual currencies, authorities at the FSB are concerned about consumers’ protection, market integrity, money laundering and terrorism financing activities.
At the same time, the Basel Committee on Banking Supervision (BCBS), explained that it will be conducting an initial evaluation about the banking exposure to digital assets. Moreover, the BCBS will be working side by side with other central banks to better understand how to treat these cryptocurrencies.
“The Basel Committee on banking Supervision (BCBS) is assessing the materiality of banks’ direct and indirect exposures to crypto-assets, clarifying the prudential treatment of such exposures, and monitoring developments related to crypto-assets for banks and supervisors,” the document explains.
The FSB brings together important national authorities from different countries all over the world, international financial institutions and regulators from a wide range of jurisdictions. It is important to mention that Mark Carney, Governor of the Bank of England, is the chairman of the FSB.
In the past, Mr. Carney commented very positively on cryptocurrencies ahead a G-20 financial meeting earlier this year in Buenos Aires. It seems that he keeps working so as to better understand which is the influence of virtual currencies in the economy.
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