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Rise of virtual assets could be a risk to financial system

The fast rise of virtual assets like Bitcoin could at certain time turn into a menace to the financial system, said the Financial Stability Board’s Mark Carney in a letter.

Broader circulation and deeper integration could be a risk to financial stability via confidence effects, in case it happened with no material bettering in conduct and resistance to cyberthreats, the letter said. It came out yesterday and was written for a gathering of G-20 finance ministers and chiefs of central banks in Argentina.

Carney, being also the BOE’s governor, spoke some time back in favour of stricter regulation to end the epoch of cryptocurrency lawlessness. Carney’s letter also had it that the Financial Stability Board would examine data gaps to facilitate monitoring of virtual assets expansion and detecting appearing threats to financial stability.

As of now crypto-assets can’t be regarded as risks to financial stability, one of the reasons being their insignificance compared to the financial system. Even given the boom of cryptocurrencies lately, their total global market share was under 1% of world economic production, according to the FSB.

Together with that, the assets cannot circulate like fiat money and are not used extensively for financial transactions, restricting their contact with the bulk of the financial system.

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