FSB Chair Warns of Growing Systemic Risks in Crypto-Finance Integration

According to PANews, Klaas Knot, the Chair of the Financial Stability Board (FSB), highlighted the increasing systemic risks posed by the deepening integration of cryptocurrencies with the traditional financial system during a speech at the Bank of Spain conference. Knot noted that the introduction of cryptocurrency ETFs and the substantial holdings of U.S. Treasury bonds by stablecoin issuers have significantly lowered the barriers for retail investors, accelerating the accumulation of systemic risks. He cautioned that the rapid innovation in the cross-border payments sector, coupled with inadequate regulation, could amplify risk transmission. Knot stressed the importance of countries expediting the implementation of FSB regulatory recommendations to establish a coordinated regulatory framework, given the cross-border nature of cryptocurrencies. This speech marked Knot's final major address as FSB Chair, where he also addressed the risks of leverage and liquidity mismatches in the non-bank financial intermediation sector.