Cryptocurrencies pose a threat to the global economy, warned the International Monetary Fund (IMF) chief Kristalina Georgieva in her opening speech at a Seoul conference on digital currencies. She further noted that high crypto asset adoption could undermine macro-financial stability.
The IMF chief requested the world to implement strong regulatory frameworks and robust infrastructures to address these potential hurdles.
She warned that cryptocurrencies could negatively impact the government’s endeavor to control money, capital flows, and public spending, as tax revenues fluctuate.
Georgieva stated that the world’s financial regulators are striving to secure the financial space by adopting and implementing rules to ensure digital currency, particularly crypto, doesn’t affect the global economy.
“The proposals are not meant to take the world back to the past, stifle innovation, or downplay the contribution of digital currency to the financial space,” she added.
Georgieva said good rules can foster innovation. She gave an example of how banks use blockchain, the technology behind crypto, to improve their trading systems. “Financial institutions want to save money, increase speed, and reach more people with their services,” she stated.
“Everyone is eager to learn from innovative ideas, particularly from emerging markets. For instance, India is a classic example where the world can learn from its remarkable digital public infrastructure,” said Georgieva.
The daily increase in the adoption of digital currency underscores the importance of not overlooking the need to mitigate potential risks associated with cryptocurrencies.
Kristalina Georgieva concluded her opening speech by stating, “In the meantime, establishing effective regulatory frameworks and robust infrastructures is the best way to conclusively and effectively address potential risks posed by digital currency.”
