Alex Coin 
The governor of Spain’s central bank issued a warning about the risks that exposure to cryptoassets could pose for banks.
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Pablo Hernandez de Cos, Governor of the Bank of Spain warned about the risks of cryptoassets for financial stability, specifically in relation to the banking system. Precisely makes the warnings several days after the central bank approved the registration of the first cryptocurrency platform, Bit2Me .
It is worth remembering that in October 2021, el Bank of Spain issued the instructions on how to register to offer cryptocurrency-related services in the country including the banks .
Apparently, the message he is giving is that with banks the matter will have its particularities.
In a speech at the Observatory of Finances of the daily newspaper El Español, Hernandez de Cos noted that cryptocurrencies have reached a capitalization of close to three trillion euros, about three times the Spanish GDP . However, he pointed out that this capitalization is subject to very erratic movements, according toEl País. “Destaca en todo caso su elevada volatilidad, como pone de manifiesto que en los últimos meses se han acumulado pérdidas de valor cercanas al 40%”, says Hernández de Cos.
The central banker warns of the dangers of stablecoin a cryptocurrency with extremely low volatility, sometimes used as a means of portfolio diversification. Examples include gold-backed cryptocurrency or fiat-pegged cryptocurrency. s and says in this regard that“la acumulación de solicitudes de reembolso resultantes de, por ejemplo, un pánico generalizado en torno a las mismas podría tensionar los mercados monetarios y, por extensión, contagiar a las entidades que actúen como custodios de los activos de cobertura”.
It adds that these potential stresses could be passed on to payment systems, as they have to handle a very significant increase in transactions, which could lead to delays in the execution of transactions or service interruption.
Dangers for banking
El País also narrates that, according to Hernández de Cos, the danger for the banking sector is that cryptoassets are a new factor of competition for the sector, and, in the case of the stablecoins The banker says: “I am not a banker, but a banker. In this regard, the banker says:
“But, in addition, an increase in banks’ direct and indirect exposure to the cryptoasset a cryptoasset is any digital asset that uses cryptographic technologies to maintain its operation as a currency or decentralized application. sector would increase both their equity equity is the funds that would be returned to a company's shareholders if all of the company's assets were dissolved and all debts were paid off in the event of liquidation. and reputational risks” .
He also said that the eventual consolidation of cryptoassets as an alternative means of payment threatens to create parallel value transfer circuits. As they are not subject to the control of central banks, “estos verían limitada su capacidad de contener la materialización de posibles riesgos sistémicos”.
He further indicates, referring specifically to the case of El Salvador, that in emerging countries there could be risks of what is known as cryptoization o replacement of the national currency currency is a medium of exchange that defines value. and other financial assets denominated in the national currency with a cryptocurrency cryptocurrencies are digital currencies that use cryptographic technologies to secure their operation. alternative . “These kinds of processes compromise monetary autonomy and erode the ability to exercise control.” he said. Earlier, the Spanish central bank had already on the adoption of Bitcoin the biggest and most popular cryptocurrency in the world. It is a decentralized digital currency that enables users to make trustless peer-to-peer transactions. in the Central American country.
Gasto de energía
In addition, the governor spoke of the climate transition risks of the financial sector, as certain processes, such as cryptocurrency mining a process where blocks are added to a blockchain, verifying transactions. It is also the process through which new bitcoin or some altcoins are created. “involve a high energy requirement” . This, he says can leave “ The risk is greater for the entities that market an area or arena, online or offline, in which commercial dealings are conducted. or invest investing is when you put money in a financial scheme with the intent of making a gain. in them”. . Thus, he pointed out that close refers to the closing price; similar to the same term used in stock trading. to 80% of the market capitalization volume how much cryptocurrency has been traded over a set period, such as the past 24 hours. of this market”. in some cases pollutes as much as 15.5 million gasoline vehicles in a year”.
In addition, and as if that were not enough, he spoke of the risks arising from the possible use of crypto for illicit activities, including money laundering. For this reason, he stressed the urgency of design responses by regulatory and supervisory authorities to the risks posed by the crypto-asset market.
These measures, he says, must be coordinated “both internationally and across sectors, given their global nature and the multiplicity of actors involved in these initiatives”. In this regard, he recalled some of the strategies already put in place by the Financial Stability Board and the Group of 20, G20.
Sources: El País Economy , OKDiario , Bitcoin.com , archivo
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