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Bank of Spain recognizes the potential of cryptocurrencies and calls for its regulation

BeInCrypto – The Governor of the Bank of Spain, Pablo Hernández de Cos, admitted the potential offered by cryptocurrencies. It was during a speech developed at the International Conference of Banking Supervisors.

The official assured that digital assets can scale and put the traditional financial system at risk. Precisely in light of this “risk”, he asked that the ecosystem be regulated.

“What we can say with confidence is that the cryptocurrency market has the potential to scale rapidly and present risks to individual banks and financial stability in general.”

According to what was expressed by Hernández de Cos, the Basel Banking Committee has been able to identify more than 20 channels through which traditional banks can be exposed to cryptocurrencies . This, in their capacity as lenders, issuers and providers of custody services or market makers.

At another point in his speech, he acknowledged that banks’ current exposures to cryptocurrencies are relatively low, representing 0.15% of operations .

Regulation of cryptocurrencies

In another passage of his speech, the official called for a prospective approach to regulating and supervising cryptocurrencies . For the highest representative of the Bank of Spain, this regulation must start from the presumed risks of the ecosystem towards traditional finance.

The banker has a familiar vision . In February of this year, the executive asked to intensify the monitoring, regulation and supervision of the market.

The Bank of Spain enabled since last year a registry of service providers with cryptoactives. It was recently reported that this list already exceeds 40 companies, which operate on Spanish soil under the knowledge (not authorization) of the regulatory entity.

Spain without recession

In another section, Hernández de Cos explained that the indicators point to “a prolongation of the weakness of the activity.” For the governor, the economic evolution does not point to “a very significant modification” of the economic forecasts published by the Bank of Spain in October. What was noted at that time indicated growth of 4.5% in 2022 and 1.4% in 2024.

In other words, “the current phase of weak economic activity” will continue in the winter . This is so, due to the effect of inflation on household income. In the meantime, activity is expected to pick up “vigor” in the spring, although pre-pandemic GDP will not recover before early 2024.

De Cos recalled that, at the end of the third quarter, the Spanish economy was still 2% below what it was at the end of 2019, when in the rest of the euro area this gap is already positive.

Regarding inflation, he warned that its moderation is “exclusively” related to the energy component , since the rest of the elements continue to rise. In this sense, he remarked that the measures adopted by the Government in the energy field contributed to containing inflation by more than two points in October.

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