A financial stability framework comprises the policies, regulations, and institutions designed to prevent and mitigate systemic risks in the financial system. Its purpose is to ensure the resilience of financial markets and intermediaries against shocks. This framework includes oversight of banks, capital markets, and payment systems to maintain confidence. Central banks and regulatory authorities implement these structures to safeguard the economy.
Context
The application of financial stability frameworks to digital assets is a growing area of regulatory concern. Authorities assess whether crypto markets pose risks to the broader financial system, particularly through stablecoins or large-scale institutional adoption. A key debate involves adapting existing regulatory tools to address the unique characteristics of decentralized finance. Future policy initiatives will likely aim to integrate digital asset oversight more formally into established financial stability mechanisms.
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