In a review of its annual “supervisory stress tests” the US Federal Reserve is considering adding a bitcoin market collapse to its list of “salient risks”.
The Federal Reserve is required to perform stress tests annually pursuant to the Dodd-Frank Wall Street Reform Act and the Federal Reserve’s stress test rules. The tests are required to be “sufficiently dynamic” and have three scenarios: baseline, adverse and severely adverse. In addition to a bitcoin market collapse other suggested tests included: war with North Korea, Euro area recession and major losses from trader misconduct.
Previous stress test scenarios have included: oil price shocks, hard landing in China, severe recession in the Euro area, emergent economy stresses and corporate and housing shocks.
Amendments to the rules will come into effect April 1, 2019.