Many people believe that cryptocurrencies could change the world. According to Randal K. Quarles, new chairman of the Financial Stability Board (FSB), they could challenge all the financial frameworks we’ve already adopted.
Delivering his inaugural speech in Hong Kong, Quarles addressed a variety of topics, with the central theme of how the FSB must evolve to address the challenges of the modern financial world. He spoke about the need to work with governments and companies to enact better reforms, and move past the crisis mode they have been in since the FSB’s establishment in 2009 to address to global financial crisis at the time.
Discussing the post-crisis framework that the FSB will now work towards, Quarles doesn’t see cryptos as a part of the solution, but rather as a challenge to their job. He said:
I trust that the framework will harness the strength of the broad and diverse membership of the FSB, that it will be forward looking, and that it will be flexible enough to handle a financial system that will continue to evolve over time. This will not be easy–developments like the emergence of crypto-assets may challenge any framework–but that makes the goal of a robust framework all the more important.
This stance, seeing digital currency not as a tool but as a threat, is not new for the FSB. In July 2018, the board released their crypto-assets report to the G20. At the time, they said, “While the FSB believes that crypto-assets do not pose a material risk to global financial stability at this time it recognizes the need for vigilant monitoring in light of the speed of market developments.”
The FSB reports directly to the G20, one of the most powerful gathering of world governments in the world. They’ve made good recommendations to that group. Their July 2018 report pushed those governments to create more regulation for cryptocurrency, which was sorely needed at the time.
However, as the crypto world gets more serious about their business applications and starts to truly shape the world’s financial systems, it would be to the world’s benefit if the FSB worked with the crypto world to shape a better tomorrow, rather than to give it the side-eye as a potential usurper.
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