Tuesday, 19 October 2021

IMF sets out policies for financial stability amid global crypto adoption

1 October 2021 – IMF released Chapter 2: The Crypto Ecosystem and Financial Stability Challenges from its Global Financial Stability Report, where it sets out policies for the emerging markets and developing economies to ensure financial stability amid global crypto adoption. The IMF believes in the potential of crypto assets as a tool for faster and cheaper cross-border payments, citing the dramatic increase in the value of the crypto markets despite the bearish trends from May 2021. The report attributes high returns, transaction costs and speed and reduced Anti-Money Laundering standards as the primary drivers for crypto adoption.

To counter the resultant financial stability challenges as a result of increased trading of crypto assets, IMF recommends that policymakers should implement global standards for crypto assets and enhance their ability to monitor the crypto ecosystem by addressing data gaps and that emerging markets faced with cryptoisation risks should strengthen macroeconomic policies and consider the benefits of issuing central bank digital currencies.

Re-disseminated from IMF

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