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Central Banks

Bank of Spain concerned about traditional banks’ exposure to crypto

23 Feb 2022 : 12:50
2 min read
  • The governor of the Bank of Spain has warned that mixing traditional banks with crypto assets could endanger the economic system
  • He explained that some crypto assets had become competitors for banks and financial institutions
  • The governor called for greater cooperation at the national and international levels and between institutions to ensure oversight

The governor of the Bank of Spain has warned the public that the mixing of traditional banks with crypto assets could endanger the economic system.

The risk of integrating crypto services

The Governor of the Bank of Spain, Pablo Hernández de Cos, has pointed out the risks of introducing cryptocurrencies into the traditional banking system. The governor stated that: “An increase in the direct and indirect exposure of banks to the crypto-asset sector would increase both their equity and reputational risks.” De Cos made these statements during the opening of the II Finance Observatory, an event dedicated to analysing the state of the financial and insurance sectors.

He explained that some crypto assets had become competitors for banks and financial institutions, especially stablecoins, which can become a store of value because of their peg to national currencies. Although banks’ exposure to these assets is still limited, de Cos believes it is increasing due to the expansion of third-party crypto products and the services banks need to provide to cryptocurrency organizations.

The benefits of cryptocurrencies

In his speech, he also mentioned some of the benefits cryptocurrencies offer to the financial industry, such as improving payment systems or acting as a catalyst for new capabilities. However, he also emphasized the dangers they pose to the financial system and, by extension, to its customers. Hernández called for greater cooperation at the national and international levels and between institutions to ensure oversight and further develop regulation of the crypto sector.

Ultimately, he believes that Spanish authorities should strengthen their supervision efforts, adding that at this stage, the bank’s plans already include allocating a privileged space to some types of crypto assets in the coming months to combat fraud.


About Author

Stan Colenbrander

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Stan is the head of news and podcast host at Cryptonary. He was formerly a member of the Cryptonary Pro community. In early 2021, he decided to drop out of journalism school at university to pursue journalism in real life and make an impact in the crypto space. . His areas of interest include the NFT industry, decentralised finance, and crypto start-ups.

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