The International Monetary Fund has warned central banks against making hasty decisions of turning crypto assets as national currencies, according to a blog post.
- IMF cites the macroeconomic stability risks due to the inability of central banks to set interest rates on the foreign currency.
- There are also foreign exchange risks that could subject domestic prices to instability, if a country adopts crypto assets as the national currency.
- Wild price swings on crypto assets have also been cited by the IMF as a major concern that central banks must take into account before adopting them as national currencies.
- Other areas highlighted by the IMF include cyber-attacks and use of crypto assets for illegal activities, as well as mining impacts on the environment.
- If the crypto assets are adopted concurrently with the national currency, the IMF warns that it may create a dilemma for businesses and individuals in deciding which one to use.
- The global body points out that central banks must make tough policy choices, including clarifying the role of public and private sectors in the crypto asset industry.
- The IMF recommends central banks leveraging on the benefits brought by the digital forms of money and technologies, without subjecting their economies to the downsides.
Digital firms of money have been lauded as providing faster and cheaper payments, enhancing financial inclusion, facilitating cross-border payments and creating competitiveness among service providers.
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