Other risks
The Board’s report also identified several non-crypto-industry issues that pose threats to financial markets and institutions, stating that improving the resilience of the $24 trillion Treasury market, which has been hit by several bouts of liquidity shortages, remained a priority.
The board also said regulators should review structural problems in the market that may be contributing to “liquidity challenges”.
The regulator also said it supports initiatives by the Securities and Exchange Commission and other agencies to address potential risks from investment firms.
China and the climate are among the top concerns
“The hedge fund industry has grown significantly over the past 5 years. In the same period, the presence of qualified hedge funds in the all-important short-term financing markets and in the US Treasury market has increased significantly,” the report stated.
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The report included a section on global risks, and one of the points it focused on was China, with reference to the difficulties of the real estate sector there and their repercussions on financial institutions and markets. The council also reiterated a call for all states and federal agencies to work together to gather data to assess the risks posed by climate change.
The Board added: “Climate-related financial risks may contribute to financial instability through several channels, including financial intermediaries incurring large losses, disruption of financial market performance, and sudden and confusing re-pricing of assets.”
