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International Monetary Fund’s Financial Stability Report released

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Rushali Das Follow

INDIA

Oct, 14 2021

Oct, 14 2021

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 IMF’s Financial Stability Board claims that the growing adoption of crypto could increase the risks to the global economy.

The IMF said, “So far, losses as a result of such risks have not had a significant impact on financial stability, globally or domestically. However, as crypto assets grow, the macro-criticality of such risks is likely to increase.”

The IMF released its Global Financial Stability Report on Tuesday. The International Monetary Fund said the adoption of cryptocurrencies and stablecoins in the developing economies and emerging markets. This could also pose a challenge to those countries’ financial stability and macroeconomic. The group claims that the risks were “contained for now,” however, they have also urged regulators to monitor crypto and keep them in check.

The IMF added that  “new sources of risk” were emerging as the crypto ecosystem gets expanded and evolved. Such risks include such as decentralized finance or Defi or stablecoins.

The group identifies the crypto space explicitly as at risk from hacking due to a “lack of transparency around issuance and distribution” of tokens. This also includes operational risks such as outages during extreme volatility periods.

It also labelled “meme tokens” and centralization as potential factors to consider.


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Rushali Das

CBW - External Analyst

INDIA

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