IMF Chief: Cryptocurrencies Posing Threats to Financial System
IMF head Christine Lagarde, said the world is on the verge of having another financial crash. Lagarde stated digital currencies is a reminder to the existing system that needs a refreshing approach in terms of regulation and innovation.
Speaking before the IMF’s annual meeting, Lagarde said: “large challenges loom for the global economy to prevent a second Great Depression”. It’s reported that IMF is concerned with bank concentration, rising lending by shadow banks in China, and a bad approach of most of the asset manager has.
For cryptocurrencies, Lagarde said the regulators need to stay calm and careful about cryptocurrencies and warned investors. Lagarde said:
“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. 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.”
IMF head also stated the total value of global debt for both public and private sector has hit an all-time high (182 trillion dollars) Lagarde said developing world countries are very prone to crash due to FED’s decisions as they are fearing the crisis hit Venezuela and Argentina, could hit the other developing countries in the world.
Lagarde has somehow optimistic about cryptocurrencies as she thinks, it could help to change the lives of some people. She said:
Digital currencies “can play a role in how people save, invest, and pay their bills”, the IMF chief wrote in her blog. “In developing economies, such advances can help secure property rights, increase market confidence and promote investment”.