Cryptocurrencies have existed for over a decade, and the call for their regulation has grown more prominent. The head of the International Monetary Fund (IMF), Kristalina Georgieva, recently highlighted the need for regulations and a solid system for cryptocurrencies due to the risks they pose to financial stability.
During an international conference on digital money in Seoul, the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, stated, “Crypto asset adoption is high, especially in emerging market economies like India, Nigeria, and Vietnam, according to Chainalysis, though data is scarce. In Brazil, for every 100 reals spent on foreign securities, 25 go into crypto assets, according to ongoing research by IMF staff. The challenge is that high crypto asset adoption could undermine macrofinancial stability.”
However, she highlighted concerns about the potential threat these high adoption rates pose to macro-financial stability.
Georgieva pointed out that crypto assets could disrupt the transmission of monetary policy through interest rate changes. Additionally, they might bypass measures like limits on foreign currency holdings, impacting capital flow management, and jeopardise fiscal sustainability by making tax collection volatile or harder to enforce.
She further added, “Our goal is to make a more efficient, interoperable, and accessible financial system by providing rules to avoid the risks of crypto and infrastructure by leveraging some of its technologies.”
Inputs from https://www.imf.org/en/News/Articles/2023/12/13/sp121423-leaving-the-wild-west-kordigitalmoney