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Crypto Sector Too Small to Affect German Financial Stability...
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Crypto Sector Too Small to Affect German Financial Stability, Says Gov’t Committee

 report from the Financial Stability Committee (AFS) of the German Bundestag has found that cryptocurrencies do not pose a threat to the country’s financial stability.

The study notes high volatility in crypto markets and states that “they lack general acceptance and transaction costs are often relatively high”:

“As the sector is still small and banks, insurers, and funds are barely involved, the stability implications of crypto-tokens have been limited so far, despite high price volatility and sharply increased market capitalization”.

According to the report, cryptocurrenciesare primarily speculative objects. The committee defines them as “crypto-tokens” instead of “currencies” because in their view, “crypto-tokens” do not fulfill the three functions of money. Per the AFS, they do not serve as means of payment in everyday life, a store of value, or a unit of calculation.

While the committee does not see cryptocurrencies as a threat to financial stability, the agency intends to monitor further developments in this area due to the high growth rate of “crypto-tokens.”

“The connection to the traditional financial system could become tighter in the future, for example, if the trading of crypto-token derivatives on recognized stock exchanges, such as Bitcoin futures contracts, establish themselves in the segment. The Committee will, therefore, monitor further developments, but currently sees no reason to intervene for macro-prudential reasons.”

The recent report reiterates statements made in mid-June, when representatives of the German federal government said that cryptocurrencies do not play an important role in the global financial system because the volume of crypto asset transactions is too small.


Editor-in-Chief @Coindaily_co and Bitcoin enthusiast

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