International Monetary Fund (IMF) Managing Director Kristalina Georgieva on Thursday urged countries around the world to develop clear rules and solid infrastructure to avoid the risks of crypto assets, warning that cryptocurrencies could ultimately undermine macro-financial stability. “Our goal is to build a more efficient, interoperable and accessible financial system by providing rules that avoid crypto risks and the infrastructure to leverage some of its technologies,” Georgieva told an international conference on digital currencies in Seoul titled “Digital Currencies: Navigating the Changing Financial Landscape.”
The IMF chief admitted that mass adoption of crypto-assets could undermine macro-financial stability, such as by limiting monetary policy transmission, capital flow management measures and fiscal sustainability.
“The challenge is that mass adoption of crypto-assets could undermine macro-financial stability,” she said. “Cryptocurrencies could undermine fiscal sustainability if taxes become unstable or harder to enforce, a future we all want to avoid.”
Despite these concerns, she said, digital currencies have become commonplace and require legal and consistent rules, such as a legal basis for anti-money laundering and taxation, as well as credibility and good infrastructure.
“Good rules can stimulate and guide innovation. For example, banks are exploring new trading infrastructure using blockchain technology, which was refined and popularized by the crypto boom. They hope to reduce costs, speed up the daily transactions of trillions of dollars in assets, and expand financial access to those currently content with low-yield deposit accounts.”
At the two-day conference, participants will discuss digital currency measures such as regulation and infrastructure, as well as central bank digital currencies. The meeting was co-sponsored by the IMF, the Ministry of Finance of South Korea and the Bank of Korea.
South Korean Finance Minister Choo Kyung-ho also said that despite a series of challenges, it is clear that the transition to digital currencies has begun and is unstoppable.
"Our goal is to build a set of policy tools that not only support economic growth and financial innovation, but also ensure reliability and stability," he said.
"Finally, it is crucial to establish global standards by working closely with national governments and international institutions, especially considering that digital currencies have no borders," Choo Kyung-ho said.