IMF Report Highlights Threat of Crypto On Emerging Markets and Politics

Last updated: Mar 30, 2023
3 Min Read
AI Generated Summary

The International Monetary Fund (IMF) has mentioned crypto in the latest issue of its Financial Stability Report.

The IMF says that one of the repercussions of the Russian invasion of Ukraine, alongside market disruptions in commodity markets and increased counterparty risk, is the “acceleration of cryptoization in emerging markets.”

Like other financial authorities, the IMF also worries that cryptocurrency is letting sanctioned countries evade economic restrictions.

“The war in Ukraine has brought to the fore a number of medium-term structural issues policymakers will need to confront in coming years, including the possibility that the geopolitics of energy security may put climate transition at risk; the risk of fragmentation of capital markets and possible implications for the role of the US dollar; the risk of fragmentation in payment systems and the creation of blocs of central bank digital currencies; more widespread use of crypto assets in emerging markets; and more complex and bespoke asset allocations in an effort to preempt the possible imposition of sanctions.”

Image via Shutterstock

The organization called for policymakers to develop “comprehensive global standards” for crypto assets, and recommends a “more robust oversight of fintech firms and decentralized finance (DeFi) platforms.”

“To preserve the effectiveness of capital flow management measures in an environment of growing usage of crypto assets, policymakers need to pursue a multifaceted policy strategy,” the report said.

In a March report from Financial Times, top IMF official Gita Gopinath said that the current conflict in Eastern Europe would spur the adoption of digital finance, from cryptocurrencies to stablecoins and central bank digital currencies.

Gopinath, the IMF’s first deputy managing director said:

“Countries tend to accumulate reserves in the currencies with which they trade with the rest of the world, and in which they borrow from the rest of the world, so you might see some slow-moving trends towards other currencies playing a bigger role [in reserve assets].”

According to her, the increased attention that crypto technology is getting “draws us to the question of international regulation,” adding that “there is a gap to be filled there.”
Coin bureau logo circle.jpg

The Coin Bureau news team comprises a group of talented writers and analysts committed to delivering timely and accurate information about the world of cryptocurrency. Led by a seasoned editor-in-chief with extensive experience in financial journalism, the team boasts diverse backgrounds and skills, from technical analysis to industry insights.

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

Previous article
European Union Officials Secretly Becoming Critical of Bitcoin: Report
next article
European Crypto Firms Call On Regulators To Give New Rules a Second Thought