For crypto assets, regulations should follow the principle of “same activity, same risk, same control”.
Klaus Knott, governor of the Bank of the Netherlands and chairman of the Financial Stability Board (CEF), has warned of a “significant” possibility of “excessive” lower economic growth and further episodes of financial instability.
“The recent turmoil in the banking sector is a disturbing reminder of the speed with which hidden vulnerabilities in the financial sector can emerge,” Knott said, although he acknowledged that these tensions are “beginning to dissipate” and their contagion is “limited”. “.
Knott pointed out that the restoration of confidence was made possible by “solid” levels of capital and liquidity in the banking system and “decisive measures” by authorities in Switzerland and the United States.
However, these cases highlight the importance of banks’ own governance practices and risk metrics, but also the importance of “strong and effective” supervision.
To this end, he indicated that CEF’s priorities will now focus more on the relationship between interest rates and liquidity risk in the financial system, the role of technology and networks in banking panics, and the implementation of “effective” resolution. International framework.
Likewise, CEF’s work to strengthen non-bank financial intermediaries (IFNB) “remains as important as ever”, especially in the areas of liquidity, liquidity and foreign exchange, Knott recalled.
Cryptoactives
The head of the G20’s International Advisory Council has emphasized that crypto-assets are “inherently borderless” and share many of the functions and risks of the traditional financial system (TradFi), which is why international regulatory and supervisory coordination is “vital”.
In particular, Knott believes that the principle of “same activity, same risk, same control” should be followed to avoid collapses like the FTX crypto asset trading platform or to prevent migration of crypto activities from jurisdictions. Control where it’s too loose. The Dutchman warns that strengthening cooperation and exchange of information between states is essential.
