IMF Seeks Global Cooperation on Crypto: Weighs Both Merits and Risks
The cryptocurrency craze has reached each and every corner of the globe and off lately has also managed to draw the attention of financial institutions. We have seen many financial institutions coming with several cryptocurrency investment products in the market to lure more participation in trading activities.
However, at this point in time, the cryptocurrency market looks quite scattered and unevenly distributed and divided. Different governments across the globe have been expressing contrasting views relating to cryptos and how would they really shape up in the future, in terms of economic importance.
In order to bring countries on one platform, International Monetary Fund (IMF) has seemed for global cooperation on cryptocurrencies. IMF is a United Nations organization which aims to seek and foster financial stability and global monetary cooperation.
As reported by Bloomberg, IMF’s Communications Director - Gerry Rice - said: “Cryptocurrencies can have potential benefits, including the promotion of financial inclusion and more efficient payment and settlement processes.”
Rice also talked about the associated risks involved with crypto investments. He said: “Cryptocurrencies can pose considerable risks as potential vehicles for money laundering, terrorist financing, tax evasion and fraud. When asset prices go up quickly, risks can accumulate, particularly if market participants are borrowing money to buy. It’s important for people to be aware of the risks and take the necessary risk-management measures.”
Hence in order to over the overcome the delusions with crypto investments, Rice seeks an international cooperating stating “Greater international discussion and cooperation among regulators, yes, would be helpful.”
Exactly a year ago, Christine Lagarde - IMF chief and managing director presented a report while addressing at the World Economic Forum. The report titled “Virtual Currencies and Beyond: Initial Considerations” offered interesting insights into cryptocurrencies. An excerpt from the report reads: ‘virtual currencies and their underlying technologies can provide faster and cheaper financial services and can become a powerful tool for deepening financial inclusion in the developing world.’
However, later the same year in September 2017, Lagarde was critical about Bitcoin and cryptos in general and stated that cryptos can cause a headache for global banks with the increase in their popularity. She further stated that “it may not be wise to dismiss virtual currencies.”
IMF is however not the first organization which has sought a global unanimous support on cryptocurrencies. U.S. Treasury Secretary Steven Mnuchin last week stated that countries must come together to decide on the future path of cryptos and prevent them from being digital equivalent to the ambiguous Swiss bank accounts. Steven said that the U.S. wants to ensure “bad people cannot use these currencies to do bad things.”
At the ongoing World Economic Forum 2018, we expect heads of global financial institutions to discuss this subject at depth and arrive at a unanimous decision about handling the new ‘crypto economy’.