FSB develops framework to monitor crypto-asset markets
18 July 2018 London
Image: Shutterstock
The Financial Stability Board (FSB) has published a report delivered to G20 finance ministers and central bank governors on the work of the FSB and standard-setting bodies on crypto-assets.
The FSB has developed a framework, in collaboration with Committee on Payments and Market Infrastructures, to monitor the financial stability implications of developments in crypto-asset markets.
The report sets out the metrics that the FSB will use to monitor crypto-asset markets as part of its ongoing assessment of vulnerabilities in the financial system.
The framework also includes metrics on trading volumes, pricing, clearing and margining for crypto-asset derivatives. Metrics on exposures will become part of the framework to the extent that they become available.
The FSB said: “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.”
It added: “Monitoring the size and growth of crypto-asset markets is critical to understanding the potential size of wealth effects, should valuations fall. 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.”
Mark Carney, FSB chair and governor of the Bank of England, noted: “Crypto-assets raise a host of issues around consumer and investor protection [but the] technologies underlying them have the potential to improve the efficiency and inclusiveness of both the financial system and the economy.”
Commenting on the report, Nigel Green, CEO of deVere Group, said: “Cryptocurrencies are the future of money and they are already undeniably part of mainstream finance. This is underscored by the report by the FSB, the international watchdog, which finds that cryptocurrencies do not pose a material risk to the global financial system—which many traditionalists with vested interests have hitherto argued in order to knock digital currencies.”
He added: “The latest report can be seen as further recommendation of cryptocurrencies from the influential FSB—which has members from all the G20 major economies.”
“The FSB's conclusion follows more and more global financial institutions, major corporations and household name investors now working with cryptocurrencies and blockchain, the technology that underpins them, and as international regulation is developed further."
The FSB has developed a framework, in collaboration with Committee on Payments and Market Infrastructures, to monitor the financial stability implications of developments in crypto-asset markets.
The report sets out the metrics that the FSB will use to monitor crypto-asset markets as part of its ongoing assessment of vulnerabilities in the financial system.
The framework also includes metrics on trading volumes, pricing, clearing and margining for crypto-asset derivatives. Metrics on exposures will become part of the framework to the extent that they become available.
The FSB said: “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.”
It added: “Monitoring the size and growth of crypto-asset markets is critical to understanding the potential size of wealth effects, should valuations fall. 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.”
Mark Carney, FSB chair and governor of the Bank of England, noted: “Crypto-assets raise a host of issues around consumer and investor protection [but the] technologies underlying them have the potential to improve the efficiency and inclusiveness of both the financial system and the economy.”
Commenting on the report, Nigel Green, CEO of deVere Group, said: “Cryptocurrencies are the future of money and they are already undeniably part of mainstream finance. This is underscored by the report by the FSB, the international watchdog, which finds that cryptocurrencies do not pose a material risk to the global financial system—which many traditionalists with vested interests have hitherto argued in order to knock digital currencies.”
He added: “The latest report can be seen as further recommendation of cryptocurrencies from the influential FSB—which has members from all the G20 major economies.”
“The FSB's conclusion follows more and more global financial institutions, major corporations and household name investors now working with cryptocurrencies and blockchain, the technology that underpins them, and as international regulation is developed further."
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