Washington: The International Monetary Fund (IMF) had said that the rapid growth of the crypto ecosystem is presenting new opportunities, but at the same time they also pose financial stability challenges.
“The rapid growth of the crypto ecosystem presents new opportunities. Technological innovation is ushering in a new era that makes payments and also other financial services cheaper, faster, more accessible, and allows them to flow across borders swiftly,” read a chapter of IMF’s latest report Global Financial Stability Report adding that the decentralized finance could become a platform for more innovative, inclusive, and transparent financial services.
It observed that Crypto asset technologies have the potential as a tool for faster and cheaper cross-border payments.
The IMF in its report said that challenges posed by the crypto ecosystem include operational and financial integrity risks from crypto asset providers, investor protection risks for crypto-assets and DeFi, and inadequate reserves and disclosure for some stable coins.
“In emerging markets, the advent of crypto assets has benefits but can accelerate cryptoisation and circumvent exchange and capital control restrictions. But increased trading of crypto-assets in these economies could lead to destabilizing capital flows,” it said.
“Policymakers should implement global standards for crypto-assets and enhance their ability to monitor the crypto ecosystem by addressing data gaps. As the role of stable coins grows, regulations should correspond to the risks they pose and the economic functions they perform. Emerging markets faced with cryptoisation risks should strengthen macroeconomic policies and consider the benefits of issuing central bank digital currencies,” the report said.
Inputs from PTI
