“Their increased comovement could soon pose risks to financial stability especially in countries with widespread crypto adoption.” crypto cryptocurrency
Economists at the International Monetary Fund say that “crypto assets are no longer on the fringe of the financial system.” In addition, they “could soon pose risks to financial stability especially in countries with widespread crypto adoption.”The International Monetary Fund published a blog post on Tuesday warning about the risks crypto assets pose to financial stability.
“Crypto assets such as bitcoin have matured from an obscure asset class with few users to an integral part of the digital asset revolution, raising financial stability concerns,” the IMF post describes.Our analysis suggests that crypto assets are no longer on the fringe of the financial system. Given their relatively high volatility and valuations, their increased comovement could soon pose risks to financial stability especially in countries with widespread crypto adoption.
“It is thus time to adopt a comprehensive, coordinated global regulatory framework to guide national regulation and supervision and mitigate the financial stability risks stemming from the crypto ecosystem,” they wrote.in October last year about the risks crypto assets pose to financial stability. Dimitris Drakopoulos, Fabio Natalucci, and Evan Papageorgiou detailed: “Cryptoization can reduce the ability of central banks to effectively implement monetary policy.
The U.S. Federal Reserve is, however, not worried about crypto hurting the country’s financial system. In December last year, Fed Chairman Jerome Powellcryptocurrencies as a financial stability concern but warned that they are risky since “They’re not backed by anything.” Meanwhile, Bank of England’s deputy governor for financial stability, Sir Jon Cunliffe, warned in November last year that cryptocurrency isTags in this story
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