BTC wires

Rapid Development of Cryptocurrencies Poses Challenges to Financial System, says IMF Chief

The public and private sectors have hit a high of $182 trillion of the total value of global debt which accounts for a growth of 60 per cent since the Great Recession of 2008. The rising interests rates by the  U.S. Federal Reserve makes the developing world governments and firms more vulnerable which may trigger a flight of funds. Also, the rest of the world may have a similar taste to the recent crises in Argentina and Turkey.

The Managing Director Christine Lagarde said before the IMF forthcoming annual meeting, “large challenges loom for the global economy to prevent a second Great Depression”. The fund is bothered with the bank concentration, rising lending by shadow banks in China, and the approach on insurance companies and asset managers, which handle trillions of dollars.

Considering the cryptocurrencies, IMF’s Chapter 2 of the Global Financial Stability Report, after an analysis, advises officials to remain observant to risks coming from fintech and cybersecurity.

“Despite its potential benefits, our knowledge of its potential risks and how they might play out is still developing. Increased cybersecurity risks pose challenges for financial institutions, financial infrastructure, and supervisors. These developments should act as a reminder that the financial system is permanently evolving, and regulators and supervisors must remain vigilant to this evolution and ready to act if needed.”

In her blog, the IMF chief wrote on digital currencies, they “can play a role in how people save, invest, and pay their bills”, She continued “In developing economies, such advances can help secure property rights, increase market confidence and promote investment”.

In her blog, she added, “If privately issued crypto-assets remain risky and unstable, there may be demand for central banks to provide digital forms of money” which reflected that she opposes central banks role on the management of currencies and the financial system unlike libertarians such as Roger Ver and John McAfee.