WASHINGTON—The managing director of the International Monetary Fund (IMF) is raising concerns about the potential risks of cryptocurrencies.
Kristalina Georgieva warned that widespread adoption of cryptocurrencies could undermine countries’ financial stability, according to CCN.com, which noted this is not the first time one of the world’s premier economic bodies has sounded the alarm.
According to the report, one of her key recommendations includes not designating cryptocurrencies as legal tender or official currencies backed by governments.
Policies in ‘Jeopardy’
Speaking at a conference on digital money in Seoul recently, CCN reported that Georgieva said crypto assets such as Bitcoin and Ethereum could weaken central banks’ ability to manage interest rates and control capital flows.
“This could jeopardize countries’ monetary policies,” the report stated. “She also raised concerns about crypto adoption making tax collection more difficult, posing fiscal challenges.”
According to CCN.com, Georgieva argued that crypto usage is already high globally, especially in some emerging economies. Citing data from blockchain analytics firm Chainalysis, she noted strong adoption in India, Nigeria, Vietnam, and beyond.
Near-Term Risks
The IMF chief said this poses near-term financial stability risks that policymakers need to address, CCN.com added.
“The challenge is that high crypto asset adoption could undermine macro financial stability,” Georgieva explained.
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