The committee – part of the Bank for International
Settlements (BIS), widely considered the central bank of central banks –
published a statement on Wednesday, saying that potential risks for banks
include liquidity, credit and market risks, operational risk (including fraud
and cyber risks), money laundering and terrorist financing risk, and legal and
reputational risks.
Although banks currently have “very limited” direct exposure
to cryptocurrencies, institutions should still “at a mimimum” carry out extensive
due diligence and disclose any exposure to crypto assets to minimize the risks,
the committee said.
Banks should further have a “clear and robust” risk
management framework to deal with the “high degree” of risk posed by
cryptocurrencies.
The risk management framework should be “fully integrated”
into banks’ overall risks management processes, including those relating to
anti-money laundering (AML), combating the financing of terrorism (CFT) and
evasion of sanctions, the committee said. A “comprehensive” assessment of the risks should be
incorporated into their internal capital and liquidity adequacy assessment
processes, it added.
Additionally, supervisory bodies should be informed of
actual or planned cryptocurrency exposure, along with assurance that the
institution has fully assessed and mitigated the risks.
Finally, the committee said that it is working with other
global standard-setting bodies and the Financial Stability Board (FSB) to
arrive at guidance on “prudential treatment” of banks’ exposure to
cryptocurrencies in order to “appropriately” reflect the risks.
Last June, BIS said in its Annual Economic Report that it’s
hard to see if cryptocurrencies solve any specific economic problem yet.
“Transactions are slow and costly, prone to congestion, and cannot scale with
demand,” it said at the time.
(text from https://www.coindesk.com/https-www-coindesk-com-cryptocurrencies-pose-risks-to-banks-and-financial-stability-warns-basel-committee)
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