Around 20% of banks have exposure to crypto assets, a Bank for International Settlements (BIS) report released Feb. 28 found. The majority of those banks are in the Western Hemisphere. According to the report, which is based on data from the first half of 2022, 17 Group 1 banks reported approximately 2.9 billion euros in crypto asset prudential exposure and 1 billion euros in crypto assets under custody. A Group 1 bank is one that has Tier 1 capital of more than 3 billion euros and is internationally active. Tier 1 capital is a bank's equity capital and disclosed reserves. …

General manager of the Bank for International Settlements Agustín Carstens spoke at the Singapore FinTech Festival on Feb. 22 and described the digital financial infrastructure he believes would best suit central bankers’ needs. He called that infrastructure a “unified ledger.” Carstens compared the theoretical unified ledger with a smartphone, saying they both work seamlessly with a variety of components. Unlike a smartphone, a unified ledger would have open architecture, however, and would show programmability and composability, that it, it would run and bundle smart contracts. There are over 2 million apps available to smartphone users, Carstens noted. He said: “A …

The Bank for International Settlements (BIS) has long taken a cautious approach to Bitcoin (BTC) and cryptocurrencies. No need for caution anymore, however, as the “battle has been won” between fiat and crypto, according to BIS. BIS general manager Agustín Carstens, who made the claim, highlighted that “technology doesn’t make for trusted money,” among further criticisms of crypto in an interview with Bloomberg. Crypto has lost the argument that it's an alternative to fiat currency, the head of the Bank for International Settlements says https://t.co/xZKFHEj3b2 — Bloomberg Crypto (@crypto) February 22, 2023 As the central bank for central banks, the …

A report from the Bank for International Settlements (BIS) suggested that trading activity on major exchanges increased in the days following the collapse of crypto firms FTX and Terraform Labs. According to a Feb. 20 bulletin on “crypto shocks and retail losses,” the BIS reported that while the price of Bitcoin (BTC), Ether (ETH), and other tokens dropped in 2022, the number of daily active users at some exchanges including Coinbase and Binance “increased markedly” following news of the collapse of Terra and FTX. The bank suggested that “users tried to weather the storm” by moving their investments into stablecoins …

Financial Stability Board (FSB) chair Klaas Knot has outlined how the organization plans to address key threats to financial stability this year in a Feb. 20 letter sent to the G20’s Finance Ministers and Central Bank Governors. Crypto assets and decentralized finance (DeFi) had a prominent place on the list of challenges the FSB saw. The G20 ministers and bankers group is meeting Feb. 24-25 in Bengaluru, India. The FSB has an “ambitious work programme” for finalizing a crypto asset regulatory framework in 2023, Knot said. The FSB is an advisory body created by the G20 and affiliated with the …

The Financial Stability Board (FSB), the financial regulator funded by the Bank for International Settlements (BIS), is pushing international regulations for decentralized finance (DeFi). The FSB on Feb. 16 issued a report on the financial stability risks of DeFi, highlighting major vulnerabilities, transmission channels and the evolution of DeFi. Despite providing many “novel” services, DeFi “does not differ substantially” from traditional finance (TradFi) in its functions, the authority said in the report. By trying to replicate some functions of TradFi, DeFi increases potential vulnerabilities due to the use of novel technologies, the high degree of ecosystem interlinkages and the lack …

The Bank for International Settlements (BIS) will heighten focus on experimenting with Central Bank Digital Currencies (CBDCs) this year via its research and development arm and will also launch a new project to monitor stablecoins. On Feb. 7, the Switzerland-based so-called “bank for central banks” announced its Innovation Hub will "increase its focus" on CBDCs in 2023 to improve payment systems. The bank added its work schedule for the year ahead also includes “Project Pyxtrial,” which it described as a new experiment being launched by the London branch of the BIS Innovation Hub to enable the “systemic monitoring of stablecoins.” …

Economists at the Bank of International Settlements (BIS) took a look at the risks inherent in the crypto ecosystem and came up with a seemingly novel solution. “Develop an alternative,” they advised in a bulletin released Jan. 12. What they had in mind was central bank digital currency (CBDC). The authors of the bulletin, headed by BIS senior economist Matteo Aquilina, said they sought lessons from the crypto winter that descended in 2022. The recent failures in crypto asset markets underscore the need to address the risks presented by crypto before those markets become “systemic,” they said. Both centralized and …

A global standard for banks' exposure to crypto assets has been endorsed by the Group of Central Bank Governors and Heads of Supervision (GHOS) of the Bank for International Settlements (BIS). The standard, which sets a limit of 2% on crypto reserves among banks, must be implemented on January 1, 2025, according to an official announcement on Dec. 16. The report, dubbed "Prudential treatment of cryptoasset exposures", introduces the final standard structure for banks regarding exposure to digital assets, including tonenized traditional assets, stablecoins and unbacked cryptocurrencies, as well as feedback from stakeholders collected in a consultation launched in June. …

Bitcoin (BTC) investors are more likely enticed by the cryptocurrency’s rising prices, rather than their dislike of banks or its perceived use as a store of value, a new report from the Bank for International Settlements (BIS) suggests. In a “BIS Working Papers” report published on Nov. 14, the central bank body looked into the relationship between Bitcoin prices, crypto trading, and retail adoption. It studied the drivers of crypto adoption by retail investors using crypto trading app downloads as a proxy for adoption and user investments at the time of download. It found that “a rise in the price …

The Bank for International Settlements (BIS) has released the full details of its mBridge pilot project to use central bank digital currencies (CBDCs) for foreign exchange. Commercial banks in four jurisdictions made cross-border transfers using CBDCs and distributed ledger (blockchain) technology in the project, which was heralded as a success. Twenty commercial banks in Hong Kong, China, the United Arab Emirates and Thailand used the custom-made mBridge Ledger platform and CBDCs issued by their respective central banks to conduct payment and foreign exchange payment-versus-payment transactions on behalf of their corporate clients between August 15 and September 23. Over $12 million …

The Bank for International Settlements (BIS), the Hong Kong Monetary Authority and the United Nations Climate Change Global Innovation Hub presented the results of their “Genesis 2.0” initiative. The project aims to explore the use of blockchain, smart contracts and the internet of things (IoT) for a global environment cause. The project resulted in two prototypes of tokenized green bonds, developed by two separate international teams, which are “de facto verified carbon credits” recognized by either international, national or other verification mechanisms. As specified in the press release from Oct. 24, both prototypes of “green bonds” are developed using blockchain …