G20 financial body begins monitoring crypto assets

The Financial Stability Board (FSB) has created a new framework to assess the risks cryptocurrencies may pose to the world's financial stability

The board released a newsletter saying it “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 adds: “FSB Chair Mark Carney in his letter to G20 Finance Ministers and Central Bank Governors in March noted that crypto assets raise a host of issues around consumer and investor protection, as well as their use to shield illicit activity and for money laundering and terrorist financing.”

The FSB, which coordinates financial regulation for the Group of 20 Economies (G20), published the framework in which it states that it will vigilantly monitor risks from cryptocurrencies such as Bitcoin and Ethereum. The G20 financial authority will also monitor volumes, pricing, clearing and margining for crypto derivatives.

The main aim of the new FSB framework is to detect any financial stability risks with sufficient time to take appropriate action.

“Monitoring the size and growth of crypto asset markets is critical to understanding the potential size of wealth effects, should valuations fall,” the FSB says. “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.”

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.

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