Belgian banks and insurance companies are not exposed to crypto assets, according to BNB. Since the market for Belgian crito is so narrow, there are no systemic risks.
Should we worry about the potential effects of Recent crypto asset directive on all financing? When asked about this by L’Écho, the Belgian National Bank (BNB), which is responsible for prudential supervision in our country, wants to be reassuring. BNB maintains that the crypto space “does not currently represent an overall risk” in Belgiumwhich states to “carefully follow the evolution of risks potentially arising from crypto assets.”
“The direct exposure of Belgian banks to crypto assets is zero.”
Internationally, several destinations Recently sounded the alarm: according to them, The interconnections between the crypto world and traditional finance can affect financial stability. The Financial Stability Board, a spin-off of the G20, has been particularly interested in seeing large banks expose themselves more and more to crypto-asset groups.
But in Belgium, nothing like that, according to BNB“For Belgian banks, the figures available to us as of December 31, 2021 indicate that they have no direct exposure to crypto assets. As for Belgian insurers, a recent analysis, dating back to October 2022, showed that they were not directly exposed to crypto assets. “.
“the challenge”
The National Bank adds that Among Belgian financial institutions, “indirect or compound exposure is also limited Until now. Insurers of traditional financial assets, such as mutual funds, whose value is linked to the evolution of crypto assets.
“Due to its small size, the Belgian crypto market does not currently present a systemic risk.”
But BNB cannot control everything. Thus, Belgian investors can use foreign institutions to invest in the crypto world. It remains to be seen if these are at risk. “An additional challenge is obtaining a view of the exposure of financial firms other than the sector controlled by supervisory authorities,” acknowledges BNB.
That remainsIn Belgium, the size of the cryptocurrency market is so small that no risks are identified at this point. “Due to its small size and limited exposure to the financial sector, this market does not currently present a systemic risk,” explains the National Bank. However, its development must be closely monitored.
“punishment approach”
BNB also stresses that MiCA Future European Regulation (Markets in Crypto Assets) would be “an excellent starting point for mitigating the risks” that crypto assets could pose to Belgian finance. But This European legislation will not come into force until 2024.
In the meantime, we must count on the strength of the National Bank of Bahrain’s control over Belgian financial institutions. In this regard, The National Bank had already, in 2019, published a circular regarding activities related to crypto assets. “In this circular, BNB mentions the risks associated with exposure to crypto assets and details its expectations regarding the appropriate care that institutions under its control must demonstrate, the governance, risk management and information dissemination that they must implement, as well as the ongoing dialogue they must maintain,” the bank explains. the National.
At the international level “Basel Committee (which brings together the banking supervisory authorities of several countries, editor’s note) Published, in 2022, an advisory document on the prudential treatment of crypto assetsBNB confirms. This provides in particular for a highly punishing approach to such assets, through a risk weight of 1250% in calculating the banks’ regulatory capital requirements.
digital euro
A deterrent percentage to say the least for financial institutions that might consider including cryptocurrencies in their balance sheet. In fact, the amount of capital banks should have is calculated as a percentage of the risky assets they have exposure to.
“Cryptocurrency cannot be compared to money issued by central banks.”
These risks include, in particular, the loans it grants, which pose a certain risk in the event of default of the borrowers. In the case of investing in crypto assets, Banks not only put themselves at risk of losing their value in the event of a “cryptocurrency crash,” but also at the risk of shattering investor confidence. and reputational risk. Hence the seriousness of the Basel Committee, which recommends a risk weight for crypto assets at 1,250%.
Finally, BNB points out that it “believes that cryptocurrencies cannot be compared to funds issued by a central bank or public authority.” To respond to investor enthusiasm for electronic currencies, The European Central Bank (ECB) is considering issuing a digital euro. But not before 2024.