What is the position of global lenders like the IMF and the World Bank on cryptocurrencies?

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While the cryptocurrency boom has opened up opportunities for business and commerce, many people are wary of its future. Most countries and their central banks are worried about the disruption, allowing cryptocurrency to be legal tender for their savings. Still, the crypto market is growing rapidly as people are entering in large numbers mainly for profit while the bull run lasts. The International Monetary Fund (IMF) and the World Bank have also often raised questions about the viability of this opaque market.

In its latest Global Financial Stability Report, the IMF called for stricter regulations to prevent the rapid growth of cryptocurrencies, which it says can lead to financial instability, consumer fraud and terrorist financing. The report highlighted the hacking risks posed by the crypto business due to its digital nature. “So far, these incidents have not had a significant impact on financial stability. However, as crypto assets become more and more mainstream, their importance in terms of potential implications for the wider economy is expected to increase, ”the report’s authors said in a blog.

They also pointed to inadequate industry disclosure and oversight, saying some currencies were likely created for the exclusive purpose of speculation or fraud. The authors said the anonymity of crypto assets creates data gaps for regulators and may even contribute to money laundering.

The World Bank, meanwhile, has made it clear its preference for central bank digital currencies (CBDCs) over private cryptocurrencies. He said CBDCs can facilitate cross-border transactions and significantly improve international payment systems. When El Salvador granted Bitcoin legal tender status, the international lender rejected its request for deployment assistance due to “environmental and transparency flaws.”

While a number of countries are considering launching their own CBDCs, there are still many unanswered questions about how the existing infrastructure will coexist with the new one, how monetary policy will be impacted and what role the private sector will play. he in his adoption. .


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