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The International Monetary Fund (IMF) has become the last major global body to call on world governments to oppose the introduction of crypto – or suffer the consequences.
In its new Global Financial Stability report, the IMF has addressed the “financial stability challenges” of the “crypto ecosystem” in a special chapter, suggesting that business leaders fight back against crypto – by issuing their own central bank digital currencies (CBDCs).
In an accompanying blog post, the IMF acknowledged that crypto offers “quick and easy payments” as well as “innovative financial services” and “inclusive access to previously non-bank parts of the world.”
It wrote that the crypto”ecosystem is also thriving, full of exchanges, wallets, miners and stablecoin issuers.”
But it also warned that crypto is full of “consumer protection risks remains significant in the face of limited or inadequate disclosure and oversight,” and noted, that some coins “were probably created only for speculative purposes or even for fraud.”
The IMF claimed that “cryptoization” is a risk in “emerging markets” where “cryptoadoption” has “surpassed that of advanced economies” due to factors such as “weak central bank credibility and a vulnerable banking system”, as well as inadequate payment networks.
This cryptoization, the authors added”may reduce the ability of central banks to effectively implement monetary policy” and create “financial stability risks” through “financing and solvency risks arising from currency misalignments.” It could also cause harm to consumers and jeopardize financial integrity, they noted.
The solution, by IMF? More regulation, more police – and more CBDCs.
The authors of the report wrote:
“Policymakers should implement global standards for crypto assets and improve their ability to monitor the crypto ecosystem by closing data gaps. Emerging economies facing crypto risks should strengthen macroeconomic policies and consider the benefits of issuing central bank digital currencies.”
At the global level, the IMF stated that “policymakers should make cross-border payments faster, cheaper, more transparent and inclusive” – using G20 plans.
He also called on national regulators to “prioritise the implementation of existing global standards” and strengthen applicable securities, payment, clearing and settlement protocols.
Stablecoin issuers were again warned of a potential regulatory storm, with the authors concluding that “as the role of stablecoins increases, the regulations should be “proportionate to the risks they pose and the economic functions they serve.” Rules”should be adjusted,” the panel suggested, with “companies offering similar products,” such as “bank deposits or money market funds.”
