Other risks
The Board’s report also identified several non-cryptocurrency-related issues that pose threats to financial markets and institutions, stating that the improved resilience of the $24 trillion Treasury market, which has been hit for several periods lack of liquidity, remains a priority.
The advice also said regulators should review structural problems in the market that could contribute to “liquidity challenges”.
The regulator also said it supports initiatives by the Securities and Exchange Commission and other agencies to address the potential risks of investment firms.
China and the climate are top concerns
“The hedge fund industry has grown significantly over the past 5 years. Over the same period, the presence of qualified hedge funds in the all-important short-term funding markets and the US Treasury market has increased significantly,” the report said. .
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 Council added: “Climate-related financial risks can contribute to financial instability through several channels, including financial intermediaries incurring large losses, disruption to financial market performance, and sudden and confusing repricing of assets.”
