Cryptocurrencies and digital assets are not currently a threat to global financial stability, the Financial Stability Board (FSB) states in a report published Wednesday.
Titled “Crypto-asset markets: Potential channels for future financial stability implications,” the document comes after a months-long dive by the international organization into what effect, if any, the nascent asset class might have on global financial stability.
In a press release, the FSB – which is hosted and funded by the Bank of International Settlements – summarized its resulting view that cryptocurrencies are not an effective means of payment, store of value or unit of account.
In particular, the release said, cryptocurrencies face issues with low liquidity, market risks from volatility and operational risks, among other concerns.
According to the release:
“Based on the available information, crypto-assets do not pose a material risk to global financial stability at this time. However, vigilant monitoring is needed in light of the speed of market developments. Should the use of crypto-assets continue to evolve, it could have implications for financial stability in the future.”
The report states that, should crypto-assets continue to gain in popularity, it might impact financial stability by having an effect on investor confidence.
Other risks arise from the potential for crypto assets to be used as a form of payment or settlement, the report continues.
While advocating for close monitoring of crypto assets and their potential risk, the FSB notes that this is difficult, at least in part, because there is not a lot of information available on the full impact they can have.
Crypto assets have an impact outside financial stability as well, the report continues, raising question about policy issues including consumer and investor protection, market integrity, anti-money laundering and combating the financing of terrorism (AML/CFT), tax evasion, capital controls circumvention and illegal securities offerings.
However, while important, the organization states that these issues are outside its primary focus, and “are the subject of work at national and international levels.”