The Basel Committee on Banking Supervision is considering requiring banks to disclose their crypto asset holdings in light of the banking crisis earlier this year. The committee, which operates under the Bank for International Settlements, identified holding crypto as one of the factors that led to the demise of several banks in March. At its meeting on October 4-5, the committee looked at the causes behind the failures of Silicon Valley Bank (SVB), Signature Bank of New York (SBNY) and First Republic Bank (FRC), as well as the near-failure of Credit Suisse (CS). Three structural trends were identified as having indirectly contributed to the banks’ failures: the increasing role of nonbank intermediation in recent years, crypto assets concentrated in a small number of banks, and the ability of customers to move their funds faster due to increasing digitalization. The report especially highlighted the role of crypto in the failure of Signature Bank. It was found that SBNY’s significant client concentration of digital asset companies put it in a precarious position when the “crypto winter” hit in 2022. Poor governance and inadequate risk management practices put the bank in a position where it could not effectively manage its liquidity in a time of stress, leading to its closure by the New York State Department of Financial Services on March 12. The committee agreed to consult on crypto asset and climate disclosures, approved the annual G-SIB assessment and published its report into the banking turmoil of early 2023. A consultation paper on crypto asset exposure disclosure will be published soon. The United States Federal Reserve Bank and Federal Deposit Insurance Corporation (FDIC) have also published their conclusions on the events in April and August, respectively. The discussion is not an indication of planned revisions to the Basel Framework, the report said. The committee amended its framework to limit crypto assets in bank reserves to 2% in January.
This News Article was automatically generated by Bob the Bot (AI)
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | North America |
| Countries | 🇺🇸 🇨🇭 |
| Sentiment | neutral |
| Relevance Score | 9 |
| People | Cathie Wood, Silicon Valley Bank, First Republic Bank, Credit Suisse, Signature Bank of New York |
| Companies | Bank for International Settlements, Silicon Valley Bank, First Republic Bank, New York State Department of Financial Services, Credit Suisse, Federal Deposit Insurance Corporation, UBS, Signature Bank of New York, Federal Reserve Bank |
| Currencies | US Dollar, Ethereum, British Pound, Bitcoin, Euro |
| Securities | None |
