The growing thirst of huge institutions and Investment capital firms for cryptocurrency exposure, according to The Financial Stability Board. It might be counterproductive not only for these financial behemoths, but for the entire world.
To avoid a global disaster, the watchdog advocated for tighter controls over operations involving large sums of money.
Global Financial Stability
According to study by the Financial Stability Board, there should be the preservation of international financial stability in the face of the threats. Major investments in rapidly expanding technologies such as crypto assets (FSB) come with these threats.
“Unanticipated consequences to financial institutions’ balance sheets and liquidity may result if they continue to invest in crypto-asset markets. If the current rate of growth and interconnection of crypto-assets with these institutions continues, it may jeopardize global financial stability.”
Despite their rapid growth, cryptocurrencies don’t account for a significant fraction of money. That is moving through traditional financial systems, according to FSB. Also, they understand that if the current growth rate continues, there might be a substantial shift in the conventional system. Note that this would have serious repercussions for global financial stability.
Contrary to popular belief, the FSB claims the cryptocurrency business is full of players. Users who don’t fully understand how they work. They cite the rise in money laundering, malware, and cybercrime as major worries. However, in general, the research focuses on additional market-related risks and weaknesses. This includes as liquidity mismatch, unbacked stablecoins, increased leverage, and regulatory oversight opacity.
Monitoring the Crypto Industry
The Financial Stability Board (FSB), an international organization superseded the Financial Stability Forum. In fact, the g7 created it to harmonize the policies of the world’s most powerful financial institutions. Furthermore, with 24 member countries and other multilateral institutions, it is now a multilateral agency. These institutions include the Bank for International Settlements, European Central Bank, European Commission, International Monetary Fund, and many more.
They also said they will continue to share ideas and information with other regulatory authorities. This is to help guide growth in a favorable way in this emerging industry around the world.
The ramifications of the acceptance of Bitcoin and Ether as non-fiat-based means of exchange are among the topics it prioritizes. The priorities include the so-called “global stablecoin” arrangements, which it has been watching since 2020.
