VIRTUAL ASSETS: RISK OF IMPACT ON FINANCIAL STABILITY

Author
, PhD in Law, Ukraine, Kyiv

In heading

 Law;

Signed print

 22.12.2023

Issues number

 2023-№4 (55)

Page

 56-72

Type of articles

 Scientific article

Code UDK

 346.6:336.717

ISSN print

 2411-5584

Abstract

 Problem setting. The spread of virtual assets in the world financial market, the emergence of their new types, and other processes that have taken place in this area and exist today, make it necessary to study the probability of risk connected with their impact on the stability of the financial system of certain countries and world financial system.
Recent research and publication analysis. In the scientific field, the following views have been formed regarding the probability of the influence of virtual assets on financial stability: representatives of the first point out that the risk in point of virtual assets at the current stage continues to remain at the same level as in regarding to cryptocurrencies before; representatives of the second indicate that the risk remains only with respect to cryptocurrencies; representatives of the third believe that due to the emergence of new types of virtual assets, the risk of their impact on the stability of the financial system increases; representatives of the fourth do not share concerns about the likelihood of virtual assets influencing the stability of the financial system of certain countries and the global financial system.
Paper objective. The purpose of the article is to substantiate the probability of the risk of destabilizing influence of cryptocurrencies on the financial system in the modern period as a necessary condition for its future forecasting.
Paper main body. Financial stability is the ability of the financial system (global or national) to perform its own functions under the conditions of the occurrence of certain risks. Regarding whether there is a risk of the possibility of virtual assets influencing the financial stability of the financial system of certain countries and the global financial system at the current stage, we note the following.
First, the further active work of the governments of different countries, international organizations and supranational institutions on the legal regulation of the circulation of virtual assets, the establishment of state regulation in this area, the introduction at the current stage of state projects for the circulation of national currencies on blockchain technology – all this proves that the governments understand the risk of the likelihood of the impact of virtual assets on the financial stability of the financial system and continue to implement measures to prevent it.
Secondly, the IMF, and most Central Banks of different countries recognize this risk, although they focus only on the uncontrolled distribution of cryptocurrencies.
Thirdly, the spread of other types of virtual assets, except cryptocurrencies, in particular stablecoins, creates a risk of possible impact on the financial stability of the financial system of certain countries, primarily those to whose currency stablecoins are “linked”.
Conclusion of the research. At the current stage, despite active efforts by the governments of various countries international organizations and supranational institutions to legally regulate the circulation of virtual assets and use other measures aimed at eliminating or reducing the risk of the likelihood of virtual assets affecting the financial stability of financial systems (both global and national), such risk remains, although it shifts to the uncontrolled distribution of certain types of them – cryptocurrencies and stablecoins.
Short abstract for an article
Abstract. The article analyzes scientific views on determining the likelihood of the risk of virtual assets affecting the stability of the global financial system and the financial systems of certain countries, the activities of the governments of different countries, international organizations and supranational institutions on the legal regulation of the circulation of virtual assets. On this basis, the conclusion is substantiated that in the modern period the risk of uncontrolled distribution of certain types of virtual assets still remains. It has been proven that the spread of stablecoins is a factor in increasing the risk of their impact on the stability of the financial systems of certain countries.

Keywords

 financial system, financial stability, virtual assets, risk of the probability of impact of virtual assets on the stability of financial systems, cryptocurrencies, stablecoins.

Reviewer

External reviewer

Article in PDF

 56-72

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Code DOI

 https://doi.org/10.31359/2411-5584-2023-55-4-56

22.12.2023