The International Monetary Fund once again warned that cryptocurrencies could pose a serious risk to the stability and integrity of the global financial system.
The recent collapse in the crypto market was a good reason for the IMF to reiterate its warning about digital assets. Obviously, its attitude towards virtual currencies is more than negative. Against the backdrop of a steep decline in their value, these fears appear to be well-founded. Sharp price swings in cryptocurrencies could seriously destabilize capital flows in emerging markets, the fund believes.
“Crypto is being used to take money out of countries that are regarded as unstable [by some external investors]. It is a big challenge for policymakers in some countries,” Tobias Adrian, financial counselor and director of the IMF's monetary and capital markets department, said, noting that “cryptocurrency markets have lost about $1tn in value since the peak.”
According to the IMF, the new factors that raise concerns are signs of closer correlation between the value of cryptocurrencies and other financial assets in developed countries, such as US technology stocks, government bonds, and even oil. “The correlation between crypto and equity markets has been trending up strongly. Crypto is now very closely tied to what is happening in equities. We can’t just dismiss it,” Adrian noted.
