The rapid evolution of crypto assets such as bitcoin may one day make them a threat to the financial system, Mark Carney, chairman of the Financial Stability Board, said in a letter to Group of 20 finance leaders.
“Wider use and greater interconnectedness could, if it occurred without material improvements in conduct, market integrity and cyber resilience, pose financial stability risks through confidence effects,” Carney wrote. His letter, published on Sunday, was circulated for a meeting of G-20 finance ministers and central bank governors in Buenos Aires.
Carney, who is also governor of the Bank of England, called earlier this month for more regulation to bring the era of cryptocurrency “anarchy” to an end. In his G-20 letter, Carney said the FSB would look for metrics and gaps in data to help monitor the growth of crypto assets and identify emerging threats to financial stability.
For now, crypto assets don’t pose risks to financial stability, partly because they are still small relative to the financial system. Even at their recent peak, their combined global market value was less than 1% of global economic output, the FSB said. In addition, the assets aren’t substitutes for currency and aren’t much used for financial transactions, limiting their links to the rest of the financial system.
Carney’s letter also said that by November, regulators will publish an assessment of post-crisis regulations on the use of clearinghouses in the global swaps market. The review will consider “whether there are unintended consequences, in particular relating to the costs and availability of clearing”. — Reported by John Glover, with assistance from Silla Brush, (c) 2018 Bloomberg LP