Regulators should pay attention to the potential risks and fraud that could arise from financial innovations like cryptocurrencies, those risks could be so severe they may lead to banks and lenders collapse. This was the message delivered by Xuan Changneng, a deputy governor from People’s Bank of China (PBOC) during the Boao Forum, who stated that sufficient room for innovation should be provided combined with upgraded regulation philosophy, technology, and capabilities.

This is necessary to ensure that financial changes may not come at the cost of financial stability. An evidence of these risks are two crypto-friendly banks in the United States, Signature Bank and Silvergate Bank, which recently experienced problems after providing services related to cryptocurrency deposits and settlements, and had to be seized or under voluntary liquidation.

At the same forum, Liao Min, China’s Vice Minister of Finance and Deputy Director of the Office of the Central Commission for Financial and Economic Affairs, also highlighted the importance for China to involve itself actively in international cooperation seeking for the coordination of standards.

It is necessary for countries to collaborate and adhere to regulations for financial innovations, such as those based on blockchain or related to cryptocurrencies, in order to guarantee financial stability. Despite being necessary to keep in mind the risks brought by these advancements, it is essential for governments to take an active role promoting safer uses of innovative technologies.



Other News from Today