An economist at the International Monetary Fund (IMF) called for the development of protection for the global financial system from digital assets, as they pose a threat, primarily to underdeveloped states.
Tobias Adrian, director of the IMF’s Monetary and Capital Markets Department, said that the volatility of cryptocurrencies for global capital flows could create “immediate and serious risks” in developing countries:
“Cryptocurrency is used to withdraw money from countries that are considered unstable.”
The financial advisor expressed his concern about the fact that cryptocurrencies have already become a big problem for some states:
“The application of regulatory instruments to manage capital flows becomes more difficult when funds are transferred through new instruments, new channels and new service providers that are not regulated entities.”
An IMF economist is sure that traditional money management mechanisms must be “finalized in the face of the global spread of cryptocurrencies.” Adrian also recalled the growing correlation between cryptocurrencies and traditional financial markets:
“Cryptocurrency is now very closely related to what is happening in the securities market. We can’t just brush it off.”
In January, the cryptocurrency fell in price along with the shares of large technology companies. Cryptocurrency prices plummeted last week as shares of companies such as Amazon and Netflix sold off. The fall of the cryptocurrency market affected the well-being of the Bitcoin fund in El Salvador. The IMF leadership has repeatedly called on the government of this country to refuse to recognize bitcoin as legal tender. Last week, IMF economists published a report arguing that the growing correlation between cryptocurrencies and securities limits the benefits of investment diversification and increases the risk of a threat to financial stability. At the end of 2021, the IMF warned all countries of the world against accepting bitcoin as legal tender, pointing out the risks to macroeconomic stability.
Source: Bits
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