March 19, 20184min1225

G20 being in favor of cryptocurrencies is beyond every bullish expectations

As G20 nations prepare to meet in Argentina for the 2018 summit, the Financial Stability Board (FSB) – coordinator of financial regulation for the G20 – has stated that cryptocurrencies pose no dangers to the global economy. Is this why the crypto market has responded with a slightly optimistic upturn?

FSB head Mark Carney addressed a letter to G20 finance ministers and central bank governors, who also serves as the Bank of England (BoE) governor – confirmed that the FSB had undertaken a review of the possible threats cryptocurrencies might pose to global financial stability, and determined that there was no such risk.

He pointed out that crypto-assets form a small part of the financial system at their peak late last year, they were worth less than 1% of global GDP and do not pose risk to financial stability:

The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability
at this time. This is in part because they are small relative to the financial system. Even at their
recent peak, their combined global market value was less than 1% of global GDP. In comparison,
just prior to the global financial crisis, the notional value of credit default swaps was 100% of
global GDP. Their small size, and the fact that they are not substitutes for currency and with very
limited use for real economy and financial transactions, has meant the linkages to the rest of the
financial system are limited.

 

However, this might change he stated:

The market continues to evolve rapidly, however, and this initial assessment could change if
crypto-assets were to become significantly more widely used or interconnected with the core of
the regulated financial system.

 

FSB may revise its initial assessment if required. But for now Carney chalked out an action point to ensure regular monitoring and timely identification of any emerging risks or gaps:

“The FSB will identify metrics for enhanced monitoring of the financial stability risks posed by crypto-assets and update the G20 as appropriate.”

Carney who previously called for crypto regulation suggested the need for “international coordination”, given the global nature of the cryptocurrency market. He also confirmed that the financial regulations would favour the review of existing rules, as opposed to introducing new regulations altogether.

There has been a proposal from www.bitcoinargetina.org that is circling around the web but this is not an official statement from the G20 summit but rather proposal from the crypto community.

This is far from actual  G20 objectives, but it’s still a good thing that they don’t see cryptocurrencies as a threat, not yet.

 


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