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IMF Says that Cryptocurrency’s are Not Threat for Broader Financial Sector Stability

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The International Monetary Fund (IMF), while stating that global financial stability is not threatened by the growth in cryptocurrency, noted that recent sell-offs have slowed any concerns.

The IMF stated that there is significant concern about the financial system due to factors such as the possibility of a recession or high inflation. This has been accelerated by events like the Covid-19 lockdown, and the outcome from Russia’s invasion in Ukraine. CoinDesk reported on July 26 .

The agency stated in a report that there should be no concern about the cryptocurrency market, which includes assets such as Bitcoin, that are not linked to conventional banks.

Take a contrary stand on crypto threat

The IMF’s recent position on crypto is in contradiction to a report from the European Systemic Risk Board which warned that crypto’s growing popularity poses serious risks for the financial markets.

According to the IMF the market correction in cryptocurrency is not significant and has not affected the general financial sector.

Recent events have seen some businesses go bankrupt due to the correction, led by Celsius lending platform. Factors like high inflation, regulatory uncertainty and the Terra (  LUNA  ecosystem crash have all contributed to the crypto market meltdown.

Not surprisingly, the IMF has remained firm in its stance on cryptocurrency warning countries against adopting them.

The body recently changed its mind about cryptocurrencies. by Cryptobirb reported that the IMF acknowledged that digital assets could offer an alternative to traditional financial products.

The institution emphasized that cryptocurrencies and central banks digital currencies ( CDCs ) are more efficient than credit and debit cards. IMF Stated that

“Depending on the specific details of how they are configured, CBDCs and some kinds of crypto assets can be more energy-efficient than much of the current payment landscape, including credit and debit cards”

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