In a compelling address at the 2023 Banco de Portugal Financial Stability Conference on October 2nd, Mário Centeno, the governor of Banco de Portugal, emphasized the necessity for a global framework in overseeing cryptocurrencies. Centeno joined a growing chorus of regulators who argue that effective crypto regulation requires international cooperation to prevent regulatory arbitrage.
Climate Change & Crypto
Addressing a distinguished audience of policymakers, academics, and practitioners, Centeno set the tone for the conference, dedicated to the theme, “Financial stability: why does economic policy coordination matter?” He delved into crucial topics such as monetary and fiscal policy, financial regulation, climate change, and digitalization.
Centeno underscored the interconnectedness of monetary and macroprudential policies, highlighting the impact of persistently high inflation on households and businesses. He noted the distributional effects of inflation, particularly on savers and debtors.
Turning his attention to the challenges of the evolving financial landscape, Centeno emphasized the need for international cooperation in regulating global risks posed by bigtechs, fintechs, cybersecurity, and climate change. He stressed that addressing these challenges at the national level would be insufficient.
The governor expressed concerns about the volatility of crypto-assets and decentralized finance (DeFi) markets. While acknowledging the appeal of cheaper and more accessible financial services, he cautioned against the viability of new entrants, citing the collapse of several products during extreme market volatility.
Centeno highlighted the European Union’s regulatory efforts, such as the Markets in Crypto-Assets Regulation (MiCA). However, he called for further international coordination to address the fragmented regulatory landscape in the crypto space.
The governor also touched upon the challenges traditional banks face in adapting to these developments, emphasizing the importance of balancing regulatory inclusion for new players with the need to avoid stifling innovation.
Centeno outlined three indisputable conclusions in the context of climate-related financial risks: the global nature of these risks, their potential to be a source of systemic risk, and the need for global coordination to address them. He called for a holistic approach by regulators and supervisors to ensure the proper functioning of the financial sector in the face of climate-related challenges.
Centeno concluded by expressing optimism for a highly productive conference and encouraged engaging discussions among participants. His call for international cooperation and a robust regulatory framework resonated as a key takeaway for addressing the complexities of the contemporary financial landscape.
Related Reading | Analysts Predict Massive Bull Run Led By XRP: Uptober’s Potential For 10x Gains