In recent months, cryptocurrencies have seen tremendous growth. As these highly volatile assets evolve, concerns about the current financial system grow. It is no surprise that the findings of a FED report confirm this trend.
Bitcoin (BTC) and other cryptocurrencies as well as stability are among the threats to the financial stability of the United States, as are concerns related to covid-19 and tensions with China, The Ecofin Agency learned from a report by the US Federal Reserve (FED) earlier this month.
As part of its market intelligence gathering, the US Central Bank surveyed a wide range of contacts between February and April on the risks to the country’s financial stability. These contacts include, it is learned, brokers, investors, consulting firms, politicians and academics.
While the risks associated with the Covid-19 pandemic with vaccine-resistant variants remain the greatest concern, Interviewees cited other risks such as economic and market shocks resulting from a potentially faster-than-expected economic recovery. Cryptocurrencies and stablecoins are in good position in the list of the most mentioned threats, whereas they were not found in the previous EDF survey.
The appearance of these digital assets in this list is not surprising. It reflects the sentiment that has prevailed in the markets for several months, as cryptocurrencies continue to gain popularity. The awards of BTC, Ether and their other peers crossed record thresholds this year, pushing several players in the global financial sector who disdained this asset class for their volatilities to change their tone and take an interest in it. Concerned about this meteoric growth, some central banks have embarked on their own digital currency projects; initiatives that have multiplied in recent times.
As more and more people talk about the impending revolution brought about by these assets, several major players (including reputable financial institutions) are pushing for regulatory changes in the United States and elsewhere in the world. For example, for Paypal’s CEO, Dan Schulman, who believes that the international financial system will undergo more changes in the next 10 years than in previous decades, changes are needed to be ready for this revolution.
Source: Agence Ecofin / By Louis-Nino Kansoun