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BIS Economists Propose 3 Crypto Regulations for Regulators

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Pavan A Follow

INDIA

Jan, 19 2023

Jan, 19 2023

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Economists at the Bank of International Settlements (BIS) have recommended three policies for global regulators to adopt to address the risks posed by cryptocurrencies. They have advised authorities to examine multiple policy options while concurrently working to enhance the current monetary system for the benefit of the public. 

 

Last week, the Bank of International Settlements released a report titled "Addressing the risks in crypto: laying out the options" authored by economists Matteo Aquilina, Jon Frost, and Andreas Schrimpf. 

 

The document delves into the potential risks linked to digital currencies and the diverse choices open to governing bodies and central financial institutions to tackle these risks. 

 

The authors of the report presented three potential actions for addressing the risks associated with cryptocurrencies. The first option is to outright ban certain activities related to digital currencies. Another approach is to isolate the crypto market from traditional finance and the real economy, effectively creating a separate system that operates independently. 

 

The third possibility is to regulate the crypto sector in a manner similar to traditional finance, implementing similar rules and regulations. 

 

However, the report notes that these options are not mutually exclusive and that a combination of them could be utilized to effectively mitigate the risks stemming from crypto activities. It is important to note that the authors of the report have not specified any specific strategy to implement but they have provided the options that could be considered. 

 

Despite acknowledging the crypto markets' volatile history of dramatic highs and lows, which have caused significant financial losses for many investors, the economists at BIS determined that these failures have yet to have a negative impact on the traditional financial system or the real economy. However, they also cautioned that this could potentially change in the future. 

 


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Pavan A

CBW - External Analyst

INDIA

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