Global finance researchers: Crypto assets don't pose risk—yet
A report released Sunday by the Financial Stability Board ahead of a high-profile G20 meeting of finance officials downplayed worry that bitcoin and other similar digital currencies are harming the global economy.
Virtual currencies and so-called crypto assets do not yet pose a systemic risk, said the Financial Stability Board, the body which makes recommendations about the financial system, in a study released Sunday.
"The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time," the study read. "The market continues to evolve rapidly, however, and this initial assessment could change if crypto-assets (notably digital currencies) were to become significantly more widely used or interconnected with the core of the regulated financial system."
The report's release comes directly ahead of a high-profile meeting of finance ministers and central bank leaders in Buenos Aires in the first major meeting of the G20 this year.
Last year saw the meteoric rise of hundreds of virtual currencies led by bitcoin, which late last year was fetching almost $20,000 per unit before a slump to around $8,000 currently.
The body, chaired by Bank of England Governor Mark Carney, said in an assessment of the financial climate going into the G20 meeting that "the current backdrop of strong and balanced global growth is underpinned by a resilient global financial system that is the product of determined efforts by the G20 and FSB over the past decade."
But the report stressed the need to "regularly scan the horizon to identify and assess emerging risks," including the rise of largely unregulated and often volatile cryptoassets, which it said required enhanced monitoring.
"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.
"At the same time, the technologies underlying them have the potential to improve the efficiency and inclusiveness of both the financial system and the economy," the study noted.
It concluded that, "given the global nature of these markets, further international coordination is warranted."
The FSB, based in Basel, Switzerland, was created after the collapse of US financial services firm Lehman Brothers a decade ago in order to reinforce the financial system.
How to deal with crypto will be a central item on the G20 meeting agenda this week, specifically at the request of France and Germany. Opinions within member nations range from the desire for much tougher regulation to a hands-off approach.