The International Monetary Fund (IMF) published a report on global financial stability, in which it devoted an entire chapter to the analysis of the cryptocurrency ecosystem. The section consists of 18 pages and is part of the three most relevant pillars for the current economy, according to said entity.
In the biannual edition published this month, the organization positioned the cryptocurrency ecosystem as the second topic of global interest at a financial level. The other two are the rebound in the economy after the covid-19 pandemic and investment funds that promote green businesses .
The IMF warns that the universe of cryptocurrencies and decentralized economies (DeFi) continue to grow and evolve rapidly. This has generated that some banks begin to provide services on crypto assets. Although they are scarce, the birth and growth of non-bank financial institutions has spread.
The document specifies that the size of the DeFi grew by USD 110 billion in September. And he adds that, in the first five months of 2021, the market capitalization of cryptocurrencies almost tripled to all of 2020. In May, precisely, it reached the historical peak of USD 2.5 trillion.
The reason for this boom is largely due to increased interest in stablecoin investment, which has quadrupled in the last year. Its trading volume is higher than that of other crypto assets and has shown an improvement in price. The IMF maintains that “its relative stability has protected users, unlike other crypto assets that have high volatility.”
The cryptocurrency ecosystem offers opportunities and risks
The IMF maintains that the universe of crypto assets has two sides, so you have to take it with special care to be able to take advantage of it and not lose out. It explains that it offers, on the one hand, a new and exciting world of opportunities, but, on the other hand, a scenario full of challenges.
Although the entity ensures that financial assets, such as cryptocurrencies , they provide benefits – especially to investors and emerging markets – , they also hide many risks. It states that the main one is the current limitation of regulatory entities to control them due to anonymity and lack of data.
Some signs of This alert – for example, increased financial risk-taking and increased fragility in the non-bank financial institutions sector – are indicative of the deterioration of the foundations of financial stability. If left uncorrected, these vulnerabilities could become a legacy of structural deficiencies.
International Monetary Fund (IMF).
In other words, it explains that the rise of cryptocurrencies reveals a lack of trust and support from the population in traditional financial entities. That is why he warns that each nation must update and adapt to its needs to increase credibility in the economic and monetary system.
Otherwise, «medium-term growth is jeopardized and the resilience of the financial system is put to the test world”. Above all, in developing countries where the economy is not very stable, something that the IMF had already mentioned before, as published by CriptoNoticias months ago.
One of the examples that the report refers to This is the case of El Salvador, stating that it advises against following its policies. The IMF recommends not converting bitcoin into legal tender, as this Central American country has done. Although it recognizes that it can be positive for emerging economies or countries dependent on the dollar, if it is regulated, since the ecosystem will continue to grow.
Therefore, at the end of the report, The IMF calls to action on political leaders to take action on the matter. It indicates that the disclosure of crypto assets should be improved, implement global standards, control their risk, enact de-dollarization policies and improve monetary credibility.