2 Additional information about SUERF is available on its website, www.suerf.org/. 3 The amortization of premiums on portfolio securities holdings results in downward pressure on the size of the 13 / 15  BIS central bankers' speeches  Federal Reserve’s balance sheet over time, even absent a reduction in reinvestments associated with increasing redemption caps. Specifically, the balance sheet includes securities holdings at face value and records unamortized premiums (discounts) as a separate asset (negative asset). As the premium (discount) security amortizes to its par value—with an associated offsetting reduction (increase) in remittances to the U.S. Treasury—the size of the balance sheet declines (increases). 4 The maturity structure of the balance sheet was only loosely incorporated into the purchase plan. Purchases of  Treasury securities were targeted at maturity sectors; within each sector, specific issues were selected for purchase using a relative-value approach based on a spline fitted to market prices. Sack, Implementing the Federal Reserve’s Asset Purchase Program, February 9, 2011. Treasury securities acquired through reinvestment are allocated in proportion to issuance. Agency MBS purchases are distributed across instruments roughly in proportion to anticipated gross issuance of those securities at the time. Potter, The Implementation of Current Asset Purchases, March 27, 2013.
Investors in schemes involving crypto tokens may also be exposed to a heightened risk of fraud. These schemes are often conducted online by operators whose authenticity and credibility are difficult to verify. Managing crypto risks The challenge for central banks and regulators is this: how can we harness the potentially transformative benefits of blockchain technology and crypto tokens while containing some of their risks? MAS has to-date chosen not to regulate crypto tokens directly. But we are: 3/6  BIS central bankers' speeches  focusing on the activities associated with crypto tokens, evaluating the different kinds of risks these activities pose, and considering the appropriate regulatory responses, all the while, seeking to ensure that we do not stifle innovation. The key risks MAS is monitoring in the crypto world are in the areas of financial stability, money laundering, investor protection, and market functioning. Financial stability MAS and other regulators are studying the nexus between the crypto world and the financial system to assess how risks to financial stability may be transmitted: market risk from the direct exposure of financial institutions to crypto tokens; credit risk through unsecured lending to crypto token businesses; and leverage when borrowers pledge crypto tokens as collateral to borrow and buy more crypto tokens. MAS assesses that the nature and scale of crypto token activities in Singapore do not currently pose a significant risk to financial stability. But this situation could change, and so we are closely watching this space.