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Adopting cryptocurrency as money not advisable, IMF warns nations

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3 years ago

May 7, 2022

The International Monetary Fund (IMF) is concerned about “heavy” debt-service burdens in low-income countries — stating that debt servicing in Nigeria gulps 56 percent of tax revenue.

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International Monetary Fund (IMF) Managing Director, Kristalina Georgieva, has warned countries to desist from adopting cryptocurrency as their legal tender, against central bank-issued money.

Georgieva’s caution comes on the heels of emerging markets like the Central Africa Republic joining El Salvador to officially declare bitcoin as a legal currency, in relation to their country’s fiat.

Both the Central Africa Republic and El Salvador had adopted the crypto asset to support their domestic currency and sustain their economy by luring bitcoin holders to their country for business transactions and tourism.

In a statement on Friday, summarising the speech of Georgieva during IMF Spring Meetings in April, the global financial body said it was not advisable to embrace crypto as money in the economy.

The IMF highlighted how the crypto currencies were initially seen as an anti-establishment movement that threatened the power of central banks and their monopoly control of the money supply.

However, it stated that nations are changing their perception about the digital currency, but Georgieva cited the Central Bank Digital Currency (CBDC) as the best innovation for a country’s financial system.

“The future of money was a central topic at the IMF’s Spring Meetings… the IMF’s Managing Director Kristalina Georgieva said that the use of volatile crypto assets as money was not advisable.

“Stable coins provided some of the same investment opportunities, but central bank digital currencies (CBDCs) of the sort being piloted by many countries were the most exciting innovation,” the statement reads.

It was gathered that the IMF “is expanding its work on digital money in several areas, including striking the right balance in international regulation and the risks to the monetary sovereignty of smaller nations.”

According to Georgieva, “Disruptive is good but destructive is bad.”