The Basel Committee cautioned the global banking system that the growth of the decentralized currency industry could pose a serious risk to the economic and financial stability of the world.
Established in 1974 by the governors of the Group of Ten Central Banks, the Basel Committee on Banking Supervision [BCBS] concerns itself with the supervision of the world’s banking system. The committee keeps a regular check on the degree to which the world’s banks are exposed to the risk of volatile assets, in this case, digital assets.
In a March 13 statement, the committee stated that digital assets cannot be relied upon to replace the traditional structure of fiat currencies. Moreover, these assets are not a viable medium of exchange nor a store of value, according to the Basel Committee.
The report stated that the virtual currency industry posed a significant risk to the traditional financial world, primarily due to the volatile nature of the assets. Furthermore, threats related to liquidity, frauds, market manipulation, credit damage, money laundering, and terror financing were rampant in the crypto-industry.
However, the committee did admit that the banking world had “very limited” direct contact with the cryptocurrency industry. The committee went on to suggest that the crypto-industry should enhance its risk management protocols, to protect against its own volatility.
The statement read,
“The Committee is of the view that the continued growth of crypto-asset trading platforms and new [commercial] products related to crypto-assets has the potential to raise financial stability concerns and increase risks faced by banks.”
On principle, cryptocurrency proponents do not want to merely compete with the global banking world, but want to replace them. Bitcoin [BTC], the top cryptocurrency in the market, was created as a mathematical-logical currency that was decentralized,