German and French finance ministers and central bank governors have sought joint action by the G20 group of advanced and developing countries to tackle the risks posed by cryptocurrencies, reports said Friday.
In a letter to the finance minister of Argentina, which holds the G20 presidency now, they have asked the matter to be placed as the top agenda for the upcoming meeting of the leaders from these countries in March.
The first meeting of the G20's Digital Economy Task Force is being held in Buenos Aires on February 8 and 9.
"We believe there may be new opportunities arising from the tokens and the technologies behind them," French Finance Minister Bruno Le Maire, his German counterpart Peter Altmaier, Bank of France governor Francois Villeroy de Galhau and his German peer Jens Weidmann said in the letter.
"However, tokens could pose substantial risks for investors and can be vulnerable to financial crime without appropriate measures," they said.
"In the longer run, potential risks in the field of financial stability may emerge as well," they added.
They have sought an international report on the impact of cryptocurrencies, an International Monetary Fund report on the financial stability risks they pose and trans-boundary efforts to regulate them.
Earlier this week, European Central Bank Executive Board member Yves Mersch urged regulators and legislators on all levels to urgently pay close attention to mitigating the potential risks that could stem from the rapid growth of cryptocurrencies.
Further, he said any virtual currency business of banks must be "rigorously supervised" and they must not accept cryptocurrencies as collateral or accept them with sufficient haircuts.
"If you increasingly have bridges between the virtual world and the real world and then there is a collapse in this virtual world, it could drain liquidity from the real world," Mersch said in an interview to Bloomberg this week, the text of which was put up on the ECB website.
"This then becomes a concern for the central bank." The ECB is also more concerned about the social and psychological effect digital currencies seem to have on the real economy, he added.
by RTT Staff Writer
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