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Investing.com – The International Monetary Fund (IMF) had warned Group of 20 (G-20) countries that the development of the cryptocurrency market could cause problems for the banking system.
The IMF’s report on “Macro-Financial Implications of Crypto-Assets” delivered to the G-20 in February at a meeting in India, but not released until Monday, pointed out that “a widespread proliferation of crypto-assets comes with substantial risks to the effectiveness of monetary policy, exchange rate management and capital flow management measures, as well as to fiscal sustainability.
The IMF had also estimated that “there may be a need to modify central bank reserves and the global financial safety net, which would lead to potential instability. Finally, banks could lose deposits and have to cut lending.”
These conclusions follow “very useful discussions with the Indian Ministry of Finance, as well as participants in international focus groups” and led the G-20 to decide to frame global rules on cryptocurrencies. through a summary document.
This document, which has not yet been finalized, will be produced jointly by the IMF and the Financial Stability Board (FSB).
The IMF report to the G20 also notes that “many risks are associated with crypto-assets, although the importance and relevance of specific risks differ according to national circumstances”.
Finally, note that the report does not see all negatives in cryptocurrencies either, pointing out that despite the “notable risks, crypto-assets have developed technologies that the public sector can exploit in pursuit of its own political objectives”.