Assessing Macrofinancial Risks from Crypto Assets

Burcu Hacibedel and Hector Perez-Saiz

No 2023/214, IMF Working Papers from International Monetary Fund

Abstract: Failures in the crypto space—including the fall of Terra USD and the FTX debacle—have sparked calls for strengthening countries’ policy frameworks for crypto assets, including by enhanced regulation and supervision. How have these heightened concerns about crypto assets been picked up in systemic risk assessment, and what can be done going forward? In this paper, we introduce a conceptual macrofinancial framework to understand and track systemic risks stemming from crypto assets. Specifically, we propose a country-level Crypto-Risk Assessment Matrix (C-RAM) to summarize the main vulnerabilities, useful indicators, potential triggers and potential policy responses related to the crypto sector. We also discuss how experts and officials can weave in specific vulnerabilities stemming from crypto asset activity into their assessment of systemic risk, and how they can provide policy advice and take action to help contain systemic risks when needed.

Keywords: Crypto assets; vulnerabilities; systemic risk; macrofinancial; analyzing Macrofinancial risk; macro-prudential risk; country-level Crypto-Risk Assessment Matrix; micro-prudential risk; price fluctuation; Virtual currencies; Financial sector; Currencies; Credit risk; Blockchain and DLT; Global (search for similar items in EconPapers)
Pages: 35
Date: 2023-09-29
New Economics Papers: this item is included in nep-ban, nep-fdg, nep-pay and nep-rmg
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