BIS Report: Financial Stability Not at Risk by Crypto Growth
A recent report on the study of digital assets released by the Bank of International Settlements claims that virtual currencies, as they stand, offer no risk to the stability of the global economy. This statement has been noted to directly contradict those previously remarked by the central bank.
News Manipulates Market Values
The recent study conducted by the BIS claims that market values of digital assets are directly impacted by statements addressed in industry news, particularly those discussing government regulations. A correlation has been noted between news discussing legislation and significant rises in market values. The study claims that news offering updates on the confirmation of legal policies pertaining to digital assets and their associated ICOs correlate with major rises in market values.
However, critics have not taken lightly to the conclusion this report offers, describing it as questionable, to say the least. The study draws conclusions between significant correlations suggesting that as a result, the digital asset market relies on the operation of regulated financial entities with such markets actually separated into multiple jurisdictions. This conclusion claims that digital assets are coming close to governmental regulation.
Although it may be a natural phenomenon that industry events and policymakers announcing progress towards the official acceptance of virtual assets may translate to a boost in market values, critics of the study believe that concluding that digital assets directly rely on the regulation of institutions is slightly farfetched. Regardless, the report encourages governing organizations to maintain a watchful eye on the crypto and blockchain industry with the understanding that it poses no direct risk to the world’s economic system. The report states that although digital assets do not currently pose risks to the stability of the global economy, continued vigilance is necessary to stay ahead of possible threats and monitor each development as the technology progresses.
An important change must be noted in the point of view offered by the BIS’s recent research, as it directly contradicts its own claims previously presented. According to Agustin Carstens, BIS Head, Bitcoin can be described as a mix of both bubble and Ponzi schemes. Carstens also went as far as to describe the cryptocurrency as a natural disaster several instances throughout 2018.
This March another study was issued by the BIS regarding the establishment of a crypto based bank known as the CBDCs. The statement expressed a need for serious concerns claiming that the organization would pose fundamental problems that stem beyond simple payment solutions or shifts in monetary based policy.
The BIS market committee chair, Jacqueline Loh, stated that a single advance towards officiating the CBDC would first need to be met with careful and detailed analysis and consideration.