FSB report sets out framework to monitor crypto-asset markets

This document was released on the 13 March 2018 From the Financial Stability Board.
edited and additional comments by Luke Lamb using word and grammarly 


Responding to the concerns of members, the FSB has undertaken a review of the financial stability risks posed by the rapid growth of crypto-assets.

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.

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. For example, 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. To support monitoring and timely identification of emerging financial stability risks, the FSB will identify metrics and any data gaps.

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.

Relevant national authorities have begun to address these issues. Given the global nature of these markets, further international coordination is warranted, supported by international organisations CPMI FATF IOSCO

For the full pdf, please click the link FSB 13/03/2018

Considering that this document clearly states that there is only limited use for #crypto assets and see the technology only as a financial system show that none of the #G20 understands what a #blockchain is and what its capabilities are.

From March through to today June the organisations as mentioned above proceeded to make a follow-up report (full pdf report)

 Executive Summary

At their 19-20 March 2018 meeting in Buenos Aires, G20 Ministers of Finance and Central Bank Governors called on the FSB to report by July 2018 on its work and that of other standard setting bodies (SSBs) on crypto-assets. This note provides an overview of the work of the Financial Stability Board (FSB), Committee on Payments and Market Infrastructures (CPMI), International Organization of Securities Commissions (IOSCO) and the Basel Committee on Banking Supervision (BCBS). The current work can be summarised as follows:

  • The FSB, in collaboration with CPMI, has developed a framework and identified
    metrics to monitor the financial stability implications of crypto-assets markets.
  • CPMI has conducted significant work on applications of distributed ledger technology,
    and is conducting outreach, monitoring, and analysis of payment innovations.
  • IOSCO has established an initial coin offering (ICO) Consultation Network to discuss
    experiences and concerns regarding ICOs, and is developing a Support Framework to
    assist members in considering how to address domestic and cross-border issues
    stemming from ICOs that could impact investor protection. IOSCO is discussing other
    issues around crypto-assets, including, for example, regulatory issues around crypto assets
  • The BCBS is quantifying the materiality of banks’ direct and indirect exposures to
    crypto-assets, clarifying the prudential treatment of such exposures, and monitoring
    developments related to crypto-assets and FinTech for banks and supervisors.

 This work is being coordinated among members. Collectively, the work of the FSB and SSBs, including the Financial Action Task Force (which is reporting separately to the G20), should help to identify and mitigate risks to consumer and investor protection, market integrity, and potentially to financial stability.

Having taken a brief view of the document, I can tell you that they still do not fully understand the technology behind the #blockchain. The primary concerns from the report that they currently have are geared towards criminal activity and that there is no backup of #crypto assets.

Considering the history of Banks and their institutions, it’s not been a smooth ride in fact bank lending across the board was never genuinely analysed in the same way that is currently being done with the crypto markets. Crashes have been regular also throughout history. So before they point fingers, they should maybe do a better job within their own walls first. I would advise the FSB to employee some tech guys to show them the way.





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