According to the International Monetary Fund (IMF), there is still a lot of work to be done where cryptocurrency regulation is concerned. The IMF’s deputy managing director said that before the war between Ukraine and Russia broke out, there had already been an increase in the use of cryptocurrencies and it appears to be happening more in emerging markets than anywhere else. The IMF’s top two leaders talked about crypto regulation last week on the Foreign Policy Live podcast. The Deputy Managing Director of the IMF, Gita Gopinath, and the Managing Director KristalinaGeorgieva had been questioned about the response of the governments to the increasing number of challenges to the global economy, including crypto.
The Managing Director stated that digital assets have been divided into three categories by the IMF. These are crypto assets, such as bitcoins, central bank digital currencies (CBDCs) and stablecoins. Speaking about crypto assets, Georgieva said that they need to have regulatory frameworks that should be harmonized as much as possible globally. She added that they were hopeful that the higher attention on this topic would result in some appropriate policy action. The IMF chief went on to say that stablecoinshad the potential of playing a positive role if they are regulated properly because they are backed by assets.
Georgieva went on to say that the IMF’s key role was to build tunnels for connecting these different CBDCs, as this would minimize the damage of the fragmentation on the world economy. As for Gopinath, she was appointed as the deputy managing director of the IMF last year in January. The Indian-American economist had also been the chief economist of the IMF between 2019 and 2022. Talking about crypto adoption, she said that the use of crypto had already increased before the military invasion of Ukraine and emerging markets were the hotspot for it.
She went on to say that crypto and other digital currencies had begun to play an important role in those parts of the world where people don’t have the same access to regular forms of credit and financial inclusion is also limited. As far as the use of crypto during the Russia-Ukraine war is concerned, the deputy managing director said that they did not have a clear picture as of now about how much this conflict had triggered the use of crypto because it is not easy to put together such a picture. However, she added that they were keeping close track of it, especially where its impact on the global economic order is concerned.
Gopinath said that it was fair to conclude that the concept of central bank digital currencies (CBDCs) would certainly gain more traction globally because of recent events. She added that it was necessary to be careful about the regulation that would be needed for ensuring that all types of digital money do not pave the way for evading restrictions of capital risk flow, especially where the developing and emerging economy is concerned. She concluded that there was still a lot of work to be done where crypto regulation and that of digital money is concerned.
