According to a report published by the Financial Stability Board (FSB) on 10th October, international central banks and financial officials think that cryptocurrencies “pose no significant risks” to global economic stability.
The FSB is an international agency made up of 68 organisations including central banks, watchdogs and government finance departments that make recommendations for financial systems globally. Its document “Crypto-asset markets: Potential channels for future financial stability implications” is important, as it potentially opens the way for wider adoption of crypto assets in the banking world.
The report says that “bankers see no significant dangers in cryptocurrencies, as their total market capitalization was at $830 billion at its peak and has since dropped to $210 billion, which barely reaches 2 percent of the global value of gold.”
However, despite the fact that this is a very encouraging statement, the FSB still believes that regulatory bodies should still keep a close eye on the virtual currencies market. The report brought up the issue of crypto price manipulation saying: “Illiquidity, concentrated ownership, fragmented market structure, and other issues also make crypto assets potentially susceptible to price manipulation.”
Other issues it focused on were the way in which the crypto industry raises policy questions and how to best handle consumer protection.
This new paper follows a previous FSB report from July that was presented to the G20 finance ministers and central bank governors. In that, its members also said that they didn’t believe that cryptocurrencies posed a significant threat, but again mentioned that they needed substantial monitoring. They cited the rate at which the market has grown as the reason for this, and they have reiterated this as the reason in the report published this month.
Significantly, back in May 2018, the International Monetary Fund also said that it didn’t see how crypto could threaten global financial stability, although it too said that if there was a threat it would come from the market expanding too quickly without relevant regulations to safeguard everyone involved.