IMF Issues Warning Against Cryptocurrency Adoption By Emerging Countries
Charles Hoskinson, Founder of the Cardano Foundation and the CEO of Input Output Global, commented on Twitter on the recent warning by the International Monetary Fund (IMF). The IMF cautioned emerging markets against adopting cryptocurrency, as the organization believes that it will destabilize their financial system.
Cryptocurrency has been increasing in popularity recently and its adoption has increased drastically. A lot of emerging economies are now adopting cryptocurrency at an increasing rate, with the citizens and government taking steps towards improving its adoption. Even developed countries are engaged in internal deliberations over the role of cryptocurrency in their economy and diverse policies are being adopted in response to the crypto phenomenon.
Adoption of Crypto Will Upset Financial Stability
This warning by the IMF was reported on October 1, when the organization warned against ‘cryptoization’ of emerging economies because it will undermine capital controls in the long term. Also, the IMF predicts financial instability in the short term in these emerging countries that are embracing ‘cryptoization’.
This warning was issued by the International Monetary Fund in response to a query regarding the adoption of Bitcoin as legal tender by El Salvador, and other countries adopting such crypto friendly policies. Cryptocurrency has been increasing in popularity with a lot of countries now adopting or considering adopting Bitcoin and other cryptocurrencies.
The regulator believes that the adoption of cryptocurrency by emerging countries is mostly due to poor economic policies and the unreliable payment systems. The regulator also believes that central banks of these countries are weak and with low credibility, as well as the local banking system which are not capable. IMF also blamed high inflation and the unstable local currency as some of the factors supporting the increasing adoption of cryptocurrency.
The IMF considers crypto a threat to the local fiscal policy and also as a tool for tax evasion. Hence, the suggestion by the IMF to consider Central Bank Digital Currency as an alternative to deal with the increasing adoption of cryptocurrency.
Criticism of IMF’s Warning
Charles Hoskinson responded to the statement by the IMF on Twitter. He was of the opinion that crypto will help these emerging countries and save them from hyperinflation and the centralized rails controlled by the local banks and IMF.
Edward Snowden, US whistleblower, tweeted against Central Bank Digital Currency (CBDC) especially following the report that the US Fed is considering launching a digital dollar. He considers Central Bank Digital Currency (CBDC) a perversion of cryptocurrency and a fascist cryptocurrency. This is because the proposed FedCoin will have a devastating effect on the savings of the average Americans, which could be reduced to zero hence ensuring the average American will spend their CBDC quickly.
Also, he thinks this move by the Fed will give them absolute control over the money of Americans and hence they will have the power to decide the spending habits of the average American. He thinks the money saved in the bank by U.S. citizens will no longer truly belong to them.
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