International Monetary Funds (IMF) managing director, amidst the increasing global adoption of crypto in different countries in the world, is hammering on the countries of the world to cut back from setting crypto as a legal tendency, as opposed to central bank-issued funds.
A Stern Warning
The statement which is more of a warning at this point is in no way baseless as the IMF is watching countries in the world like the US and Canada embrace the digital market into its system with open arms.
Georgieva made the statement to warn governments like that of the Central Africa Republic and El Salvador who have added Bitcoin as one of their country’s legal tender. Both governments introduced bitcoin into their respective countries’ financial markets in order to support their respective national currencies and grow their respective economies.
The reports mentioned that the countries adopting digital currencies should know that although the advantages of them being used in their economy are glaring, the risks involved are also very high as cryptocurrency is very unstable and unpredictable.
The body further noted that nations that go ahead with adding Cryptocurrency to their country’s economy as a legal tender, stand to face issues later on safeguarding the financial security of their country’s citizens and businesses, as well as ensuring that its financial system is free of flaws.
Reasons Behind the Warning
The report was triggered by Several countries, including El Salvador and the Central African Republic, which have adopted Bitcoin as a legal form of currency. El Salvador was the first country to accept the currency in late September of last year, and CAR has followed suit.
A Reasonable Solution
As she warned strongly against the application of such coins as a form of exchange, she also brought forth the (CBDC) Central Bank Digital Currency as a better option for the financial system of a country.
The statement highlighted how different nations on the planet are now looking at cryptocurrency in a different light, it also made clear that the CBDC is a better alternative for a country’s financial market.
It went on to say that (CBDC) is a more reliable system, as it is controlled in some way by countries, and is a better solution than an unstable coin, which would make available the same investment opportunities as the CBDC would.
It is evident from its recent message to countries that the IMF is not just sitting back and watching. It is looking to expand its work in several areas on digital money, including finding the balance in regulating the coins internationally and the issues smaller countries would face in their financial power.