G20 - cryptocurrency approval letter

The Financial Stability Board (FSB), which coordinates the financial regulation for the G20 Group (20 largest economies), negated the need for strong regulation of the cryptocurrency market. In an open letter to the finance ministers and heads of central banks who take part in the upcoming group summit. Mark Carney, the chairman of the Council, called for cooperation in the field of defining cryptocurrencies and their place in the modern world economy. He also cut down on speculation and divided votes that the new legal framework was currently necessary for the correct recognition of digital currencies and blockchains.

Crypto assets, because this is generally called cryptocurrency and token instruments, according to Mark Carney do not pose a direct threat to financial security. This is partly because they are small compared to the entire capital markets ecosystem. Even at the last peak of capitalization, their total market value in the world was less than 1% of global GDP. For comparison, just before the global financial crisis, the face value of credit default swaps (CDS) was over 100% of global GDP.

The letter, however, coherently suggested that this assessment may change with the increase in the share of cryptocurrencies in the global financial market. Therefore, the Financial Stability Board decided to continue monitoring the situation related to cryptovalacts. The G20 working group committed to conducting regular briefings on the development of the situation. Of course, there was no guarantee that the technology underlying the cryptocurrency - blockchain - is very much sought after by the modern economies of the future. It is also worth adding that the general tone of the report is positive. We can also correlate this state with relative consolidation on the cryptocurrency markets and the so-called "Goldilocks Economy" - an economy that is neither "too hot nor too cold".