According to reports, a managing director at the International Monetary Fund (IMF) believes that the growing usage of cryptocurrencies might be one of the consequences of Russia’s conflict with Ukraine.
According to a recent Financial Times (FT) report, IMF’s first deputy managing director Gita Gopinath warns that broad international sanctions on Russia risk shattering the current economic global order.
Gopinath thinks that as a result, acceptance of crypto assets, central bank digital currencies (CBDCs), and stablecoins may grow. Regulation would therefore become necessary.
According to Gopinath, “All of these issues will get more attention in the aftermath of recent events, which brings us to the issue of international regulation. There is a void there that has to be filled.”
Gopinath also told FT that the US dollar’s supremacy is expected to wane as a consequence of the sanctions imposed by the US in reaction to Russia’s invasion of Ukraine on February 24th.
In December, the IMF cautioned that as the almost $2.5 trillion cryptocurrency market grows increasingly integrated with the regular banking system, systemic financial stability concerns might develop in some nations.
In January, the institution discussed how the growing popularity of cryptocurrencies, along with their price volatility, may have a detrimental impact on established markets.
Recently, the managing director of the IMF Kristalina Georgieva said that the institution prefers CBDCs over cryptocurrencies.
“If CBDCs are structured responsibly, they have the potential to provide higher resilience, security, availability, and cost savings than private forms of digital money. That is unquestionably true in comparison to unbacked crypto assets, which are inherently volatile.”