Skip to content

IMF rules out crypto market threat to broader financial sector stability

The International Monetary Fund (IMF) has stated that the growth of cryptocurrencies does not threaten global financial stability while noting that the recent sell-off has slowed down any concerns.

Indeed, the IMF suggested that significant concern for the financial system stems from factors like the possibility of a recession and high inflation, which has accelerated by occurrences like the Covid-19 lockdown and the outcome of Russia’s invasion of Ukraine, CoinDesk reported on July 26.

In a report, the agency noted that the cryptocurrency market with assets like Bitcoin that are delinked from conventional banks, should not be cause for concern.

Contradicting stand on crypto threat 

The IMF’s latest stand on crypto contradicts a report by the European Systemic Risk Board that warned that the rising popularity of crypto poses significant risks to the general financial market

According to the IMF, the market correction in cryptocurrencies is limited and has not impacted the general finance sector. 

Recently, the correction has plunged some businesses into bankruptcy, with lending platform Celsius leading the way. The crypto market meltdown has been driven by factors like regulatory uncertainty, the high inflationary environment, and the Terra (LUNA) ecosystem crash. 

Notably, the IMF has since maintained a hard stance on cryptocurrencies warning countries against adopting digital currencies. 

IMF changing view on cryptocurrencies

However, the body has recently appeared to change its view of cryptocurrencies. As reported by Finbold, the IMF noted that digital assets could be an effective alternative to traditional finance products. 

Most specifically, the institution pointed out that select cryptocurrencies and central bank digital currencies (CBDCs) can be a more effective payment solution than credit and debit cards. 

“Depending on the specific details of how they are configured, CBDCs and some kinds of crypto assets can be more energy-efficient than much of the current payment landscape, including credit and debit cards,” the IMF said. 

Finally, in the past, IMF chief economist Gita Gopinath had expressed opposition to a blanket ban on cryptocurrencies but called for regulation of the sector.

Best Crypto Exchange for Intermediate Traders and Investors

  • Invest in cryptocurrencies and 3,000+ other assets including stocks and precious metals.

  • 0% commission on stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.

  • Copy top-performing traders in real time, automatically.

  • eToro USA is registered with FINRA for securities trading.

30+ million Users
Securities trading offered by eToro USA Securities, Inc. (“the BD”), member of FINRA and SIPC. Cryptocurrency offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. Finbold.com is not an affiliate and may be compensated if you access certain products or services offered by the MSB and/or the BD

Read Next:

Finance Digest

By subscribing you agree with Finbold T&C’s & Privacy Policy

Related posts

Sign Up

or

By submitting my information, I agree to the Privacy Policy and Terms of Service.

Already have an account? Sign In

Services

Disclaimer: The information on this website is for general informational and educational purposes only and does not constitute financial, legal, tax, or investment advice. This site does not make any financial promotions, and all content is strictly informational. By using this site, you agree to our full disclaimer and terms of use. For more information, please read our complete Global Disclaimer.