Factors of vulnerability in digital asset markets may pose risks to financial stability in developing-market economies. This is stated in report BIS.
“There are concerns about the ability of developing countries to monitor crypto-asset markets and assess the risks to financial stability associated with them,” the document says.
The report examines liquidity, credit, operational risks, and those associated with the absence of bank intervention and with capital movements.
“One of the ways price volatility translates into market risk is direct ownership of crypto assets by institutions or households,” the document explains.
Risk vectors may arise from particular regulatory conditions in developing-market economies.
BIS urged local regulators to consider selective bans, curbs and regulation of specific crypto assets. It recommended establishing clear norms that would distinguish between “activity-based regulation and regulation based on entities.”
The report notes that many participants in developing markets view digital assets as a “safe haven from volatility in domestic currencies.”
Earlier BIS experts described CBDC as the foundation of future monetary systems. Cryptocurrencies, in experts’ view, the wrong path toward tokenisation.
Earlier, IMFacknowledged that banning digital assets is not the best way to reduce the risks associated with them.