The scenario of collapse of the cryptocurrency market can be to be included in the list of risks that the Federal reserve will take into account when conducting Supervisory stress tests. This writes CoinDesk.
Changes to the scheme of such testing, the Federal reserve Board of governors announced Thursday, February 28. In a statement, the fed was, in particular, noted that “the collapse of the market of bitcoin” can be considered as one relevant market risks.
The recommendation to include an amendment that would include a cryptocurrency that was proposed in one of the comments to the document. The author believes that the collapse of the bitcoin market should be considered as one of the “extraordinary upheaval”. Among them, he also took such a hypothetical situation, like a war with North Korea and the large losses due to malicious actions of traders.
The Board of governors also stated that he intends to take control of the stress tests are “dynamic enough” to handle other pronounced market risks. Among the latest added to these test scenarios were, for example, sharp changes in oil prices and the recession in the Euro area.
“Controlling stress tests are intended to provide managers and boards of Directors of companies, the public and regulators prognostic information and assistance which can be used to assess the potential effect of stressful conditions on the ability of large banking organizations to absorb losses, while simultaneously fulfilling its obligations to creditors and other counterparties, and continuing to carry out its activities in the field of crediting”, — the document says the fed.
In the case that the proposed scenarios are approved, they will be adopted from 1 April.
We will remind, last summer the fed’s Jerome Powell has made several critical statements about bitcoin and other cryptocurrencies. In particular, he said that cryptocurrencies are ideal for money laundering, and are also bubble, is attractive for inexperienced investors.
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