Therefore, the reform agenda of the past decade has focused on reducing leverage in the financial system. Banks are indeed better capitalised than they used to be – while leverage in the private and public sector has continued to increase. 2 Are crypto-assets relevant for financial stability? There is no simple metric that measures “financial stability”.
Rather, financial stability is shaped by the complex interaction between the financial products that are offered, market structure, leverage and governance of financial institutions, regulation and, not least, the incentives and objectives of the people who are providing these financial services. The one important distinction between providers of traditional financial services, such as banks, and crypto-asset providers is technology.