Top Regulators Warn, Crypto assets Threaten Financial Stability

    Article Overview

    According to Bloomberg News, financial regulators across the globe have stated that digital assets could soon pose a threat to financial stability around the world owing to their structural vulnerabilities, scale, and relation with the traditional financial system

    The areas of concern comprise shortage in liquidity, fragile technological setup, leverage usage, as per a report released Wednesday by the Financial Stability Board. The report revealed concerns like a low level of understanding of crypto-related assets by the consumers and investors involved because of money laundering, cyber-crime, and ransomware. 

    The international nature and faster evolution of these assets imply that the authorities must consider preemptive and prompt evaluation of the possible policy responses. These policies must prioritize co-operation in a cross-border and cross-sectoral relationship, which also includes sharing information faster to stay abreast with the developments of the crypto assets

    Bloomberg News also reports a note of caution from the FSB’s earlier report released in 2018 is an evolution. It can be concluded that the crypto assets were not a material risk to the financial stability globally. Then the FSB had said that there would be continuous monitoring of asset class on a regular and ongoing basis, given the fact that there is the considerable speed in the existence and development of the data gaps. 

    The FSB comprises representatives from authority bodies like the Federal Reserve, Bank of England, and the European Central Bank


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