The International Monetary Fund (IMF) has urged countries to regulate cryptocurrencies to prevent them from threatening financial stability and undermining economic policies.
In a speech at a digital currency conference in Seoul on Thursday, IMF managing director Kristalina Georgieva said that crypto assets could pose risks to macro-financial stability if they are widely adopted without proper rules and infrastructure.
The challenge is that high crypto asset adoption could undermine macro-financial stability, said Georgieva.
Georgieva said that crypto assets could have negative impacts on monetary policy transmission, capital flow management, and fiscal sustainability. She cited the volatility of tax collection as an example of how crypto assets could affect fiscal policy.
She also warned that crypto assets could facilitate illicit activities such as money laundering, tax evasion, and cybercrime. She said that countries need to cooperate and coordinate to address these challenges and ensure a level playing field for all participants in the financial system.
IMF Balances Crypto Innovation And Regulation
Georgieva acknowledged that crypto assets also offer opportunities for innovation and efficiency in the financial sector. She said that the IMF’s goal is to help countries harness the benefits of crypto technologies while avoiding the risks.
She said that the IMF supports the development of digital money that is interoperable, accessible, and inclusive. She said that the IMF is working with countries to provide guidance and technical assistance on how to design and implement digital money policies and regulations.
She also said that the IMF is learning from the experiences of different countries, especially emerging markets, in developing digital money. She praised India for its digital public infrastructure that enables millions of people to access financial services.
She added that the IMF is also drawing lessons from the history of money in advanced economies and how they have adapted to changing technologies and circumstances.
Georgieva concluded her speech by saying that crypto assets are not a threat to the existing financial system but rather an opportunity to improve it. She said that the IMF is ready to work with countries to find the right balance between regulation and innovation in the digital money space.
She said that the IMF’s vision is to create a more efficient, resilient, and inclusive financial system that serves the needs of people and the planet. She said that digital money is a key part of this vision and that the IMF is committed to making it a reality.
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