Crypto Might Quickly Pose Dangers to International locations’ Monetary Stability – Regulation Bitcoin Information


International Monetary Fund (IMF) economists say that “crypto assets are no longer on the fringes of the financial system.” Additionally, they could “soon pose risks to financial stability, particularly in countries with widespread crypto adoption.”

“Our analysis suggests that crypto assets are no longer on the fringes of the financial system”

The International Monetary Fund (IMF) published a blog post on Tuesday warning of the risks of crypto assets to financial stability. The paper was written by three economists from the IMF’s Money and Capital Markets Department: Tobias Adrian, Tara Iyer, and Mahvash S. Qureshi.

“Crypto assets like Bitcoin have matured from an obscure asset class with few users to an integral part of the digital asset revolution, raising concerns about financial stability,” the IMF post said.

The authors explained:

Our analysis suggests that crypto assets are no longer on the fringes of the financial system. Given their relatively high volatility and valuations, their increasing movement could soon pose a risk to financial stability, especially in countries with widespread crypto adoption.

“It is therefore time to adopt a comprehensive, coordinated global regulatory framework to guide national regulation and supervision and mitigate the financial stability risks posed by the crypto ecosystem,” they wrote.

Three other people from the IMF’s Currency and Capital Markets Department similarly warned in October last year about the risks that crypto assets pose to financial stability. Dimitris Drakopoulos, Fabio Natalucci and Evan Papageorgiou elaborated: “Cryptoization can reduce the ability of central banks to implement monetary policy effectively. It could also create risks for financial stability.”

However, the Federal Reserve is not concerned that crypto could harm the country’s financial system. In December last year, Fed Chair Jerome Powell dismissed cryptocurrencies as financial stability concerns, but warned that they are risky because “nothing backs them.”

Bank of England Deputy Financial Stability Governor Sir Jon Cunliffe warned in November last year that the cryptocurrency was growing closer to a threat to global financial stability due to the sector’s rapid growth.

What do you think of the IMF economists’ analysis? Let us know in the comments section below.

Kevin Helms

As an Austrian economics student, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the interface between economics and cryptography.

Photo credits: Shutterstock, Pixabay, Wiki Commons

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