आईसीटी समाचार
The International Monetary Fund warned on Friday that the introduction of digital currencies in emerging nations may lead to the "cryptoization" of local economies, weakening exchange and capital restrictions and disturbing financial stability.According to US blockchain researcher Chainalysis, Bitcoin and its siblings have surged in price and popularity in the previous year, with emerging and developing market nations like as Vietnam, Pakistan experiencing fast increase in some metrics of usage.
In principle, cryptocurrencies make moving money across borders cheaper and faster. Supporters argue that digital tokens such as stablecoins might help preserve savings from excessive inflation or currency volatility. El Salvador became the first government in the world to embrace bitcoin as legal money in September, with supporters predicting that the experiment will reduce expenses for billions of dollars in remittances transferred to the Central American country.Unsound macroeconomic policies and inefficient payment systems, according to the IMF, are among the factors driving cryptocurrency adoption in emerging nations, coupled with the allure of rapid profits, which has enticed investors all over the world.
However, the IMF stated that determining the actual degree of cryptocurrency use in emerging economies is difficult.Factors like central bank credibility and weak domestic financial systems, which can drive "dollarization," can also contribute to rising crypto usage, according to the Fund.Dollarization refers to the use of a foreign currency, usually the US dollar, in addition to or instead of a native currency.
The process is fueled by factors such as high inflation or the volatility of a native currency.Stablecoins, which are digital tokens with a fixed value and are beneficial for savings and trade, might offer substantial problems by increasing existing dollarization tendencies, according to the IMF.
"Dollarization can obstruct central banks' efficient execution of monetary policy and contribute to financial stability issues due to currency mismatches on bank, business, and family balance sheets," the report stated.The IMF noted that "cryptoization" may pose a danger to fiscal policy, with digital assets potentially aiding tax avoidance .
As a reaction to the emergence of cryptocurrency, the fund advised developing countries to tighten macroeconomic policies and examine the potential benefits of issuing central bank digital currencies.
