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IMF Calls for Crypto Regulation to Safeguard Financial Stability

December 15, 2023

IMF Calls for Crypto Regulation to Safeguard Financial Stability

The head of the International Monetary Fund (IMF), Kristalina Georgieva, emphasized the urgent need for regulations and infrastructure governing cryptocurrencies during a conference in Seoul on digital currencies. Speaking on Thursday, Georgieva expressed concerns about the potential risks crypto assets pose to global financial stability.

Highlighting the challenge, Georgieva stated, “The challenge is that high crypto asset adoption could undermine macro-financial stability.” She underscored the impact on monetary policy, capital flow management, and fiscal sustainability, citing the volatility in tax collection associated with widespread crypto adoption.

The IMF’s managing director outlined the organization’s goal to establish a more efficient, interoperable, and accessible financial system through regulatory frameworks. She clarified that the aim is not to revert to a pre-crypto era but to create rules that prevent the risks associated with cryptocurrencies while leveraging their technologies to build essential infrastructure.

“Our goal is to make a more efficient, interoperable and accessible financial system by providing rules to avoid the risks of crypto, and infrastructure by leveraging some of its technologies,” said Georgieva during the joint conference with the South Korean government and the central bank.

Georgieva reassured that regulations are not intended to stifle innovation but rather to guide and spur innovation in a controlled manner. The call for regulation aligns with the growing recognition of the need to balance innovation with the protection of financial systems from potential disruptions caused by unregulated cryptocurrencies.

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