The International Monetary Fund (IMF) has issued a set of policies that can be used by emerging markets and developing countries to ensure the financial stability of global cryptocurrencies.
The International Monetary Fund believes in the potential of cryptocurrencies as a tool for faster and cheaper cross-border payments, citing a sharp increase in the value of cryptocurrencies despite bearish trends in May 2021. The report notes high profitability, transaction costs and speed, as well as declining Anti-Money Laundering (AML) standards ) as the main driving forces behind the adoption of cryptocurrency.
To counter the economic problems associated with increased cryptocurrency trading, the International Monetary Fund recommends the following:
“Policy makers should implement global standards for cryptocurrencies and improve their ability to monitor the cryptocurrency ecosystem by closing data gaps. Emerging markets facing crypto risks should strengthen macroeconomic policies and appreciate the benefits of issuing digital currencies to central banks.”
The IMF report shows that the valuation of the cryptocurrency market has surpassed Bitcoin (BTC) along with a sharp increase in the supply of stablecoins. Three-year IMF data shows that risk-adjusted returns on volatile cryptocurrencies such as Bitcoin are comparable to other popular benchmarks such as the S&P 500, as shown in the table below:
In addition to the CDBC release, the IMF also recommends “proportional risk management and in line with stable global currencies.” In addition to implementing digital central bank currencies, de-dollarization policies will help governments deal with macro-financial risks.
On the topic: The International Monetary Fund intends to “strengthen” the control of digital currency
In July 2021, Cointelegraph announced the International Monetary Fund’s plan to “strengthen” the oversight of digital currencies. An earlier IMF report emphasized that the benefits of digital assets are that “payments will be easier, faster, cheaper, and less expensive, and they will cross borders quickly. These improvements can lead to greater efficiency and integration with significant benefits for all.”
The IMF also previously planned to meet with El Salvador’s President Neb Bukele to discuss the implications and possibilities for the mass adoption of Bitcoin.