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Economists at the International Monetary Fund (IMF) say that "crypto assets are no longer on the fringe of the financial system." in addition, they “could soon pose risks to financial stability especially in countries with widespread crypto adoption.”
‘Based on our analysis, crypto assets are no longer marginal to the financial system
The International Monetary Fund (IMF) released a blog post Tuesday warning of the risks posed by crypto assets to financial stability. The post is written by three economists in the IMF's Department of Money and Financial Markets: tobias adrian, tara iyer and mahvash s. qureshi.
"crypto assets like bitcoin have matured from an obscure asset class with few users to an integral part of the digital asset revolution, raising financial stability concerns," says the imf.
The authors elaborated on:
our analysis suggests that crypto assets are no longer on the fringe of the financial system. given their relatively high volatility and valuations, their increased comovement could soon pose risks to financial stability especially in countries with widespread crypto adoption.
'it is therefore time to take a holistic approach, a coordinated global regulatory framework to guide national regulation and monitoring and mitigate financial stability risks arising from the crypto ecosystem," they wrote.
three other people from the imf’s monetary and capital markets department similarly warned in october last year about the risks crypto assets pose to financial stability. Dimitris drakopoulos, fabio natalucci, et evan papageorgiou detailles: "cryptoization can reduce ability of central banks to effectively implement monetary policy. It may also pose risks to financial stability."
However, the United States Federal Reserve is not concerned about cryptography harming the country's financial system. in december last year, fed chairman jerome powell dismissed cryptocurrencies as a financial stability concern but warned that they are risky since “they’re not backed by anything.”
meanwhile, bank of england’s deputy governor for financial stability, sir jon cunliffe, warned in november last year that cryptocurrency is getting closer to posing a threat to global financial stability due to the sector’s rapid growth.
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