IMF SEES CRYPTO AS INVESTMENT OPPORTUNITY RATHER THAN INSTRUMENT FOR ASSET STORAGE

Tue 19 October 2021:

IMF Managing Director Kristalina Georgieva said on Tuesday that the International Monetary Fund (IMF) considers cryptocurrency an opportunity for the future rather than a stable way to keep assets,

“Why we are careful about the crypto assets, because they are more like an investment opportunity than a traditional way of serving as a stable store of value and one that you can rely on in daily operations,” Georgieva said during a virtual discussion on the digital economy.

Crypto assets are not backed up like conventional money, she added.

Georgieva also called for regulation of the digital economy. “Regulation matters,” she said.

The IMF chief further stressed the importance of harnessing new technology in order to improve the global economy. “If the technology is not there, (financial) inclusion is hard to achieve,” Georgieva explained.

Earlier this month IMF warns against global risks from unregulated cryptocurrency boom.

Tougher regulation is needed to prevent the rapid growth in cryptocurrencies leading to financial instability, defrauding of consumers and the funding of terrorism, the International Monetary Fund has said.

The Washington-based IMF said the 10-fold increase in the market value of crypto assets – digital or virtual currencies – to more than $2tn since early 2020 required more active and collaborative supervision by governments.

Last month, China made transactions in cryptocurrencies illegal, but the IMF said emerging and developing countries appeared to be leading the way with their use. This risked damaging the ability of central banks to effectively implement monetary policy and potentially created financial stability risks, it added.

“As a first step, regulators and supervisors need to be able to monitor rapid developments in the crypto ecosystem and the risks they create by swiftly tackling data gaps. The global nature of crypto assets means that policymakers should enhance cross-border coordination to minimise the risks of regulatory arbitrage and ensure effective supervision and enforcement,” the IMF said.

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