AFS: Cryptocurrencies Unable to Undermine Financial Stability of Germany
July 3, 2018
The Financial Stability Committee (AFS) of the Germany’s Bundestag has released a report on the research which found out that digital currencies are no threat for the country's financial situation.
The committee’s experts noted in the report that the crypto market is extremely volatile, coins involved are not used anywhere while transaction fees are often too high.
“As the sector is still small and banks, insurers, and funds are barely involved, the stability implications of crypto-tokens have been limited so far, despite high price volatility and sharply increased market capitalization”.
As the report says, digital tokens are purely speculative assets that cannot be called a currency as they are unable to function as money. For instance, as AFS put it, for these tokens to be regarded as money they must be applied as daily payments for goods and either be able to keep its cost or be an international unit of account.
Despite the researchers mentioned that crypto market does not affect the national economy dramatically, the report says, the committee will continue monitoring the further development of the industry.
“The connection to the traditional financial system could become tighter in the future, for example, if the trading of crypto-token derivatives on recognized stock exchanges, such as Bitcoin futures contracts, establish themselves in the segment. The Committee will, therefore, monitor further developments, but currently sees no reason to intervene for macro-prudential reasons”.
In addition, in June this year the Federal government of Germany has released its report in cryptocurrencies. it resembles much that by AFS. For instance, it points out that cryptocurrencies do not play the main role in the world financial system as total volume of operations with them is still too small.