Source: Twitter / @ DefenseU
The Basel-based Financial Stability Board (FSB) echoed sentiments expressed by the International Monetary Fund (IMF), as both bodies warn that in the wake of the war in Ukraine, an acceleration of crypto -ization in emerging markets "May be on the way.
Today, in a letter from the FSB to the G20 finance chiefs and central bankers, the body, which is tasked with monitoring and making recommendations on the global financial system, wrote that "the current challenges to financial stability reinforce the importance , and increase the urgency, of the FSB's ongoing political work in a number of areas, including […] strengthening the resilience of non-bank financial intermediation, as well as crypto assets and cyber risks ”.
The FSB said that "the Russia-Ukraine war has reinforced pre-existing concerns" about the "growth and potential illicit use of cryptocurrencies".
"Cryptocurrency markets are rapidly evolving and could reach a point where they pose a threat to global financial stability due to their size, structural vulnerabilities and growing interconnectedness with the traditional financial system."
FSB response to crypto - ization
The FSB said it is responding to this situation by "collaborating with regulatory bodies", including the Financial Action Task Force (FATF), its "work on the regulation and supervision of cryptocurrencies and 'unbacked' stablecoins. ”, As well as“ the analysis of the impacts on financial stability ”of the“ rapidly evolving ”sector of decentralized finance (DeFi)”.
She said her moves would "create the conditions necessary for safe innovation," but did not comment on the kind of regulatory measures she might seek to recommend. Instead, he said he would "keep the G20 up to date" on its "work on cryptocurrencies".
The IMF, meanwhile, addressed its cryptocurrency concerns in its report on global financial stability, released yesterday, where it wrote:
"The repercussions of the Russian invasion of Ukraine and the ensuing sanctions continue to reverberate globally and will test the resilience of the financial system through various potential amplification channels, including [...] the acceleration of crypto-integration in the emerging markets. "
In a foreword, IMF financial adviser Tobias Adrian warned that "the fragmentation of payment systems could be associated with the rise of central bank digital currency blocks (CBDCs)."
"The more widespread use of cryptocurrencies in emerging markets could undermine domestic policy objectives. Multilateral cooperation will remain the key to overcoming these challenges in the medium term ”.