IMF Directors Issue Crypto Warning, Call for Coordinated Policy Response To Protect Global Monetary System
The executive board of the International Monetary Fund (IMF) considers the rising adoption of crypto assets a threat to the global monetary system.
According to the IMF, the directors agreed that digital coins may have crucial implications on the UN financial agency’s mandate and policies during a discussion of a board paper providing guidance on the appropriate policy response to crypto assets.
“In particular, the widespread adoption of crypto assets could undermine the effectiveness of monetary policy, circumvent capital flow management measures, and exacerbate fiscal risks. Widespread adoption could also have significant implications for the international monetary system in the longer term.”
The IMF says member countries should adopt effective strategies amid the rising popularity of cryptocurrencies.
“Directors, therefore, emphasized that robust macroeconomic policies, including credible institutions and monetary policy frameworks are first-order requirements and that Fund advice in these areas will remain crucial.”
As El Salvador and the Central African Republic (CAR) adopt Bitcoin (BTC) as an official currency, the directors are discouraging countries from making crypto assets legal tender.
“Directors generally agreed that crypto assets should not be granted official currency or legal tender status in order to safeguard monetary sovereignty and stability.”
US banking regulators also issued a statement on the risks of crypto to financial institutions.
“Recent events in the crypto-asset sector have underscored the potential heightened liquidity risks presented by certain sources of funding from crypto-asset-related entities.”
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Author: Rhodilee Jean Dolor
