The fallout from the banking crisis from earlier this year continues as the Basel Committee on Banking Supervision is considering requiring banks to disclose their holdings of crypto assets. The committee, which operates under the auspices of the Bank for International Settlements, identified the holding of cryptocurrencies as one of the factors that led to the demise of several banks in March.
At its meeting on October 4 and 5, the committee considered the reasons behind the failure of Silicon Valley Bank, Signature Bank of New York, and Signature Bank of New York. First Republic Bankas well as the near-failure of Credit Suisse, which was later bought by its competitor UBS.
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According to According to the committee’s report, three structural trends may have indirectly contributed to bank failure: the increasing role of non-bank intermediaries in recent years, the concentration of crypto assets in a small number of banks, and the ability of customers to move their funds faster due to growing demand for cryptocurrencies. Digitization.
The report also addressed public policy issues in detail.
The report particularly highlighted the role of cryptocurrencies in the failure of Signature Bank. The committee found:
SBNY’s heavy client focus on digital asset companies puts it in a risky position when the “crypto winter” of 2022 comes. […] The Bank of the City of New York’s mismanagement and inadequate risk management practices put the bank in a position where it cannot effectively manage its liquidity in a time of stress.
The signing was closed by the New York State Department of Financial Services on March 12. Regulators stated at the time that cryptocurrencies were not behind its decision.
The report said the discussion was not indicative of planned revisions to the Basel framework. In January, the committee revised its framework to limit crypto assets in bank reserves to 2%.
At its meeting on October 4 and 5 #Basel Committee It agreed to consult on crypto-asset disclosure and climate, approved G-SIB’s annual assessment and published its report on banking turmoil in early 2023. #Basel III #Financial regulation https://t.co/iLVbtP2VzS pic.twitter.com/aSRw7YYHP7
– Bank for International Settlements (@BIS_org) October 5, 2023
Statement accompanying the report He said A consultation paper on exposure disclosure for crypto assets will be published soon.
This is just the latest rehash of the tough days for banks in March. The US Federal Reserve and the Federal Deposit Insurance Corporation published their conclusions about the events in April, and then took another look in August.
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