Beyond their likely contribution to, e.g., making payments more efficient or to driving innovation in financial markets, crypto-assets pose a number of important risks for the financial stability which could, eventually, become a material source of concern for relevant authorities if not accompanied by effective mitigation measures, as emphasised in the G20 communiqué of 18 February.2 I will begin my speech by describing the defining characteristics of the phenomenon and recent developments, before turning to the specific risks to financial stability that they may pose. I will end by highlighting some of the main elements shaping the current response of regulators and supervisors and the challenges that lie ahead. The complex universe of crypto-assets The term crypto-asset is oftentimes used to refer to a wide range of highly heterogeneous assets whose common trait is that they are a digital representation of value or a set of contractual rights. In contrast with other digital assets already in circulation, they rely on distributed ledger technology (DLT) to be transferred, traded and stored. In addition, unlike central bank digital currencies (CBDCs), they are not backed by a central bank or any other public authority. To simplify somewhat, they can be said to share certain standard technical features, such as (i) a decentralised ledger, (ii) the use of encryption techniques to secure communications over open networks, and (iii) the deployment of protocols that allow to automatically execute different types of transactions.
However, if we look at the spread between the cost of borrowing and the lending rate for mortgage institutions, there is no indication that the interest margin for mortgage institutions has fallen as a result of increased competition (Figure 5). Mortgage institutions´ long term interest margin. 12 10  %  8 6 4 2 0 Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep 1995 1996 1996 1997 1997 1998 1998 1999 1999 2000 2000 Interest rate on mortgage institutions´ borrowing, 5 years Mortgage institutions´ insterast rate on lending, 5 years. 3  BIS Review 99/2000  The new Internet-based players on the mortgage market are made up of those who mediate loans via the Internet and those who issue credit over the Internet. Players such as Blockbid, Bolånebörsen, Comboloan and E-loan search for and mediate the cheapest mortgages for borrowers. Europeloan, on the other hand, is an Internet-based credit issuer that has operated in Sweden since February 1999. The company, which also operates in Belgium and Germany, finances mortgages through securitisation. As more than 70% of the households have chosen floating interest rates on their new loans raised in the mortgage institutions during the last year, it could be suitable to look at the interest margin between short borrowing interest rates for mortgage institutions and floating interest rates on housing loans (Figure 6). This diagram suggests that the interest margin for mortgage institutions is now about 1.2% compared to about 1.5-1.7% during 1996. %  Mortgage institutions´ short term interest margin.