An international group of central bank regulators and government ministers said Sunday that cryptocurrencies don’t pose a risk to global financial stability, comments that come on the eve of talks on the subject by the G-20.
In a letter published on March 18, Financial Stability Board chairman Mark Carney, who also leads the Bank of England, said that the organization doesn’t see the tech as a threat – at least at this juncture.
“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 (cryptocurrencies) combined global market value was less than 1% of global GDP,” he continued. “In comparison, just prior to the global financial crisis (in 2008), 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.”
While the note is mostly in line with Carney’s previous comments on the limited impact of cryptocurrencies on the global financial system, the letter offers a window into where the discussions around this area may head to at the G20 meeting this week. As previously reported, government officials will meet Monday and Tuesday in part to talk cryptocurrencies, an agenda item that has been deemed “important” in a bid to reach a “common response” to regulation.
As acknowledged in Carney’s letter, a number of major countries – France, Japan and the U.S. among them – have called for a unified response to speculation around cryptocurrencies. Most recently, Japanese officials reportedly expressed interest in joint efforts around money laundering.
Indeed, some of those calling for action seem to share Carney’s assessment as well. As previously reported, U.S. Treasury Secretary Steve Mnuchin – who supports an international approach to regulation – has said in the past that he doesn’t view cryptocurrencies as a threat to financial stability.