The Bank for International Settlements (BIS) has endorsed a new global standard under which central banks will get to decide on the amount of exposure commercial banks can have to digital assets.
In a recent announcement, BIS revealed that the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of the Basel Committee on Banking Supervision, met on December 16 to endorse the “global prudential standard for banks’ exposures to cryptoassets.” The GHOS settled on January 1, 2025, as the date on which the new standard will take effect globally.
Under the new prudential standard, commercial banks can only have 2% exposure to ‘unbacked’ digital assets, stablecoins “with ineffective stabilization mechanisms,” or even tokenized traditional assets. The BIS believes this will promote responsible innovation while preserving financial stability.
“The Committee’s standard on cryptoasset is a further example of our commitment, willingness, and ability to act in a globally coordinated way to mitigate emerging financial stability risks,” Pablo Hernández de Cos, who’s the Governor of the Bank of Spain and the Chair of the Basel Committee commented.
While it wants to limit banks’ exposure to digital assets, BIS doesn’t think they pose a challenge currently to the global financial system. It said that the global banking system’s direct exposures to digital assets remain relatively low.
However, this could change in the future, and recent developments in the sector have shown that the banking industry could become contaminated by the ‘crypto contagion,’ the Basel-based bank stated.
“Today’s endorsement by the GHOS marks an important milestone in developing a global regulatory baseline for mitigating risks to banks from cryptoassets. It is important to continue to monitor bank-related developments in cryptoasset markets. We remain ready to act further if necessary,” commented Tiff Macklem, Chair of the GHOS and Governor of the Bank of Canada.
While it limits banks’ exposure to digital assets, the BIS has continued to foster cooperation in CBDC development. As CoinGeek reported, it wrapped up its mBridge cross-border CBDC pilot with China, Hong Kong, Thailand, and the United Arab Emirates in October.
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