[38] 2.6 Leverage High leverage is a key risk for financial stability – in traditional finance as well as in crypto-asset markets. A high degree of leverage amplifies boom and bust phases within the crypto-asset system, and it can be a channel for the propagation of shocks to the traditional financial system.
[39] Leverage is a particular issue in the crypto-asset system, as collateral often consists of unbacked crypto-assets with no intrinsic value, which tend to be highly volatile. Borrowed funds are often reused as collateral for other loans, giving rise to "collateral chains".