S&P shows no concern over the collapse of Cryptocurrencies

S&P shows no concern over the collapse of Cryptocurrencies
The widespread popularity of the cryptocurrencies over the past year has raised eyebrows over the inherent risk in these financial instruments.

However, credit ratings agency S&P is of the view that the breakdown in the cryptocurrencies will neither disturb the stability of the traditional financial sector nor will it affect the ratings.

Presently, any fall in the values of cryptocurrencies will only affect the individual investors not the financial system.

According to Mohamed Damak, S&P Global Ratings financial institutions sector lead, this is because the share of these virtual currencies is miniscule as compared to the traditional financial institutions.

Furthermore, Damak believes the future largely depends on the regulators and the policy makers to expand the market of such currencies by enhancing the confidence in these financial instruments.

On the other hand, ECB board member, Yves Mersch, is concerned about the implicit alliance between the virtual markets and some financial institutions. He was of the view that there should be strict segregation of assets and liabilities of such institutions.

Especially those who are involved in VC activity.

Further, he cautioned the central banks to offer liquidity, only to prevent any unforeseen upset in the financial system rather than to those who are engaged in speculation.

Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.
Sarah Kaplan is an award-winning journalist with more than 9 years of experience. She is the Editor-in-Chief of TheOofy.com. She has worked for international media companies as a reporter and correspondent. She has been awarded by Article 19. She has worked for  The Guardian Foundation/ P24 Knowledge Right Project. She has participated in See Media Observatory in Macedonia. She was Research Fellow at Friedrich Ebert Foundation in Germany.  She has been writing about technology, the latest trends in business. You can reach out to her via kaplan@theoofy.com. Also, you can connect with her at Linkedin.