• The Bank for International Settlements Innovation Hub (BISIH) submitted two reports — on cryptocurrency and central bank digital currencies (CBDCs) — to the G20 finance ministers and central bank governors.
• The BISIH report on crypto highlighted structural flaws, risks from human nature, interconnectedness with the real economy, tokenization of assets, and “cryptoisation” of economies.
• The BISIH concluded that crypto is unsuitable to play a significant role in the monetary system.

Bank for International Settlements Submits Reports

The Bank for International Settlements Innovation Hub (BISIH) submitted two reports — on cryptocurrency and central bank digital currencies (CBDCs) — to the G20 finance ministers and central bank governors this month.

Cryptocurrency Report Overview

The BISIH report on crypto provided a short overview of the crypto ecosystem of cryptocurrencies, stablecoins and decentralized finance (DeFi). It then listed “structural flaws and risks” such as centralization of much crypto trading, instability of stablecoins, irreversibility of smart contracts, risk from human nature, interconnectedness with the real economy, tokenization of assets, and “cryptoisation” of economies where cash is squeezed out.

Project Atlas

The BISIH has implemented 12 CBDC proofs-of-concept along with the central banks of Germany and Netherlands in order to visualize cross-border crypto flows through Project Atlas.

Conclusion

In conclusion, the report stated that due to its “inherent structural flaws”, it is unsuitable for cryptocurrency to have a major role in the monetary system.

Project Atlas Taken Further Steps

Further steps are needed for a holistic assessment of crypto markets according to Project Atlas’ development team.