Growth of Bitcoin: a Deadly sign for the global Banking System

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Bitcoin has always been banks worst threat

A new form of digital asset like Bitcoin is a very bad sign for the Global banking system, according to the Basel Committee.

The banking supervision forum has stated that cryptocurrencies and crypto assets have become popular despite there exposure to high volatility and risk throughout the years. According to the committee this new financial instrument is still immature and even, then it still presents a lot of risk to the global banking system.

Throughout the years it has brought threats to liquidity, markets, credits, banking operations, money laundering, terrorist financing, along with some legal and reputable risks.

In a news letter the committes stated that:

“While the crypto-asset market remains small relatives to that of the global financial system, and banks currently have minimal direct exposure. The committee is of the view that the continued growth of crypto-assets trading platforms and new commercial products related to crypto-assets has the potential to raise financial stability concerns and increase risks faced by banks.”

The decentralisation of the Banking system

This notice coming from the Basil Committee comes at a time when the growth, of cryptocurrency speculation has brought a controversy around the Blockchain industry. Major bitcoin activist have put the digital currency technology as a messiah against the corrupt banking system. As the banking systems believes that a decentralised assets technology would distribute wealth more evenly and more openly than the regular banking system. Which is currently creating money just by printing it and backed by faith.

This belief has brought the global financial system nothing but problems, suffering and has continuously torn down societies and cultures across the world. This has led many to embark on the crypto-enabled financial wave for years, sparking a revolution which is in flames. This evolving protest is about aiming to replace the global financial reserve system, the Fiat dollars (EURO,US YEN etc.) with an asset whose supply is limited and backed by Math and methodology.

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The goal is to make more people join such a demonstration, as such that they will dump the government-issued money for a mathematically-born scare asset. This will automatically lead to the devaluation of the established financial system.

However, despite this global anti-establishment stance, most the people that are in cryptocurrencies are speculators. Trying to maximise profits off crypto investments. The Basel Committee is well concerned with crypto holders who are joining interactions with an established fiat enabled financial system.

The lack of regulation and excessive price volatility in crypto asset markets have been posing a risk to banksthat do business with these nascent markets.

An individuals exposure to Cryptocurrency

According to the Basel committee, they have mentioned that it is monitoring the developments in crypto assets, including direct and indirect exposure to banks. This was in order to clarify how this technology will protect the banking system from its own high risks.

The Committee stated that:

“The Committee will in due course clarify the prudential treatment of such exposure to appropriately reflect the high degree of risk of crypto-assets. It is coordinating its work with other global standard setting bodies and the Financial Stability Board.”

After this the committee suggest that banks conduct a comprehensive analysis of the crypto-related risks. As banks should employ a clear and robust risk management framework that will protect them from crypto asset exposure and related services when things really start heating up.

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