The executive board of the International Monetary Fund (IMF) views the increasing use of crypto assets as a danger to the global monetary system.
During a debate on a boarding document outlining the necessary policy response to crypto assets, according to the IMF, the directors agreed that digital currencies may have significant ramifications for the UN financial agency’s mission and policies.
“In particular, widespread use of crypto assets poses threats to the efficacy of monetary policy, the integrity of capital flow control efforts, and the viability of government budgets. Long-term, widespread adoption might potentially have considerable effects on the international monetary system.”
In response to the increased popularity of cryptocurrencies, the IMF advises its member states to establish effective solutions.
“Directors highlighted that solid macroeconomic policies, including credible institutions and monetary policy frameworks, are requirements of the highest order, and that Fund support in these areas would continue to be essential.”
When El Salvador and the Central African Republic (CAR) adopt Bitcoin (BTC) as their official currency, the board of directors discourages other nations from doing the same.
In order to preserve monetary sovereignty and stability, directors largely agreed that crypto assets should not be awarded official currency or legal tender status.
In addition, US banking authorities made a warning on the threats crypto poses to financial institutions. Recent developments in the crypto-asset market have highlighted the possible liquidity issues posed by some crypto-asset-related businesses’ financing sources.
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