The head of the International Monetary Fund (IMF), Christine Lagarde, believes that the world community is facing another financial crisis. She expressed this opinion in a report prepared for the annual meeting of representatives of IMF member countries. This year it will be held from October 12-14 on the Indonesian island of Bali.
According to Christine Lagarde, the world is on the verge of another financial crisis and cryptocurrencies can exacerbate this economic catastrophe, as it is stated in the recent report.
The global financial system began to create chaos, uncontrolled processes that escalate problems like a snowball for the entire global community. According to the IMF head, the global national debt has reached its peak - $182 trillion. This is 60% more than it was during the 2008 crisis. Trends inherent in Argentina and Turkey may spread to other countries. Plus there is a very large dependence on the interest rate of the U.S. Federal Reserve. They are right by the threats of all developing countries. You will ask and how it is connected to crypto? Well, the recent Global Stability report published by IMF has concluded:
“Despite its potential benefits, our knowledge of its potential risks and how they might play out is still developing. Increased cybersecurity risks pose challenges for financial institutions, financial infrastructure, and supervisors.”
IMF has also urged the authorities to take a position of combat readiness regarding the new technologies appearing in the financial market.
“These developments should act as a reminder that the financial system is permanently evolving, and regulators and supervisors must remain vigilant to this evolution and ready to act if needed.”
The IMF’s opinion on crypto is constantly changing. As such in June this year, the fund published the report dubbed "Crypto assets may one day reduce demand for central bank money", urging central banks around the world to offer “better” fiat currencies in order to compete with their digital counterparts.
In May, IMF has published another report, stating that cryptocurrencies are not a threat to the financial stability, as even they showed an impressive growth in 2017-2018, their total market value is still less than 3% of the four biggest world’s banks.
In April, Lagard has dedicated to crypto and DLT the whole blog post, where she shared her thoughts on the future coexistence of the traditional and digital markets.
“There is hope that decentralized applications spurred by crypto-assets will lead to a diversification of the financial landscape, a better balance between centralized and decentralized service providers, and a financial ecosystem that is more efficient and potentially more robust in resisting threats,” Lagarde said back then.
However, just one month earlier, in March 2018 Lagarde warned about financial instability cryptocurrencies could create. According to her, they could also facilitate terrorism and money laundering.
Recently, IMF has even urged the Marshall Islands to forget about their plan to launch the national crypto. Issuing a 58-pages report Monetary Fund called on the authorities of the Marshall Islands to abandon the release of its own cryptocurrency, that was to become the second means of payment in the country after the dollar and then replace it.
It seems to be an opinion, but that opinion forms the attitude of other people to this technological phenomenon. If people become frightened, it's not that surprising why they could be so reluctant in trusting innovations in general.
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