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Thursday, June 1, 2023

Bank of Spain Warns About Risk of Extended Use of Unregulated Cryptocurrencies in the Country

Bank of Spain Warns About Risk of Extended Use of Unregulated Cryptocurrencies in the Country – Margarita Delgado, the deputy governor of the Bank of Spain, has expressed her views on the use of cryptocurrencies and how they may damage the country’s economy.

The remarks were made at a speech delivered at an event named “a climate of change” organized by the multinational professional services network PWC, which focused on the changing character of the financial sector.

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The deputy governor warned that the widespread usage of cryptocurrencies poses a number of systemic dangers, including the overall lack of information among those who utilize these assets. The mystery associated with the decentralized finance segment, which can lead to over-leveraging and payment issues, is one of the main hazards.

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Delgado elaborated on the potential effects of the crypto market on other markets:

“Its severe volatility can have a contagious effect on other markets due to fear and overreaction which can be carried to other trading settings.”

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Delgado also mentioned the impact of investing in and storing bitcoin assets on traditional banking, citing the growth of a mixed industry that provides both services to its customers. The assets’ implementation, she said, would result in a “significant increase in patrimonial and reputational concerns.”

When it comes to traditional banks offering cryptocurrency-based services to customers, the Bank of Spain has previously raised concerns.

In February, the governor of the Bank of Spain spoke against the hazards of this association at the II Finance Observatory, noting that exposure to cryptocurrency assets would introduce new risks to the banking industry.

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Finally, Delgado thinks that 12% of Spanish citizens own cryptocurrency, implying that this type of debate is necessary in order for them to gain a full understanding of the crypto landscape.

She came to the following conclusion:

“It would be crucial to determine whether these investors are completely aware of the risks they are taking or if they are just being pushed by hopes of exceptionally high revaluations.”

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