BIS tells central banks to stand up to competition from crypto.
The authors of the bulletin, headed by BIS senior economist Matteo Aquilina, said they sought lessons from the crypto winter that descended in 2022. The recent failures in crypto asset markets underscore the need to address the risks presented by crypto before those markets become “systemic,” they said.
Crypto is unlikely to go away on its own, despite the issues with it, the authors noted. They placed potential risk mitigation actions into the categories of banning specific activated with crypto, containing crypto in isolation from “the real economy” and regulating crypto “in a manner akin to TradFi.” They
“Given their public policy mandates, central banks may want to do more. By encouraging sound innovation in TradFi, they could contribute to a more efficient monetary system.”“The innovation that is present in certain areas of crypto could be harnessed to improve the way in which services are provided in TradFi.”
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