Today the Financial Stability Board that monitors the global financial system issued a
report that says crypto-assets don’t currently pose a threat to stability. However, as with previous announcements they state that vigilant monitoring is needed. The rapid rise in the market at the end of 2017 and subsequent fall is part of the reason for their watchfulness.
The most significant risk is if or when there is large-scale exposure by financial institutions. Given the preparations to support financial institutions by many crypto exchanges and custodians, as well as the growing use of crypto-related financial instruments, the vigilance is warranted.
One of the biggest concerns is how to monitor the risks. In particular the lack of information about the extent of leverage in the market. Additionally, there’s the issue of measuring direct and indirect exposures of financial institutions.
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