Crypto Could Soon Pose Risks to Countries’ Financial Stability – Regulation Bitcoin News

Economists at the International Monetary Fund (IMF) say that “crypto assets are no longer on the fringe of the financial system.” In addition, they “could soon pose risks to financial stability especially in countries with widespread crypto adoption.”

‘Our Analysis Suggests Crypto Assets Are No Longer on the Fringe of the Financial System’

International Monetary Fund (IMF). Tuesday’s blog posted a warning regarding the financial stability risks that crypto assets present. The post is authored by three economists from the IMF’s Monetary and Capital Markets Department: Tobias Adrian, Tara Iyer, and Mahvash S. Qureshi.

“Crypto assets such as bitcoin have matured from an obscure asset class with few users to an integral part of the digital asset revolution, raising financial stability concerns,” the IMF post describes.

These were the details that the authors gave:

According to our analysis, crypto assets have moved beyond the margins of the financial system. Their high volatility and low valuations could make them a risk to financial stability, especially in emerging countries.

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

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

The U.S. Federal Reserve is, however, not worried about crypto hurting the country’s financial system. In December last year, Fed Chairman Jerome Powell dismissed cryptocurrencies as a financial stability concern but warned that they are risky since “They’re not backed by anything.”

Meanwhile, Bank of England’s deputy governor for financial stability, Sir Jon Cunliffe, warned in November last year that cryptocurrency is getting closer to posing a threat to global financial stability due to the sector’s rapid growth.

What do you think about the IMF economists’ analysis? Please leave your comments below.

Kevin Helms

Kevin, a student of Austrian Economics and evangelist since 2011, discovered Bitcoin. His main interests are in Bitcoin security, open source systems, network effects, cryptography, and intersections between economics, cryptography, and Cryptography.

Images CreditsShutterstock. Pixabay. Wiki Commons

DisclaimerThis information is provided for educational purposes only. This article is not intended to be a solicitation or offer to sell or buy any product, service, or company. is not a provider of investment, tax, legal or accounting advice. This article does not contain any information, products, or advice that can be used to cause or alleged result in any kind of damage.

Get more Crypto News at CFX Magazine