On Monday a report prepared by the International Monetary Fund (IMF) on the macroeconomic impact of crypto was released. The 20-page document (downloads uppon clicked) was delivered to the G-20 on February 13 during their meeting in India.
The paper focuses on the macroeconomic implications of digital assets, analyses the potential costs and benefits and contains recommendations.
As stated in the opening pages, their increasing adoption, especially in emerging markets, has raised concerns. In particular, it focuses on Bitcoin and stablecoins, which may have strong implications for macroeconomic stability if widely adopted.
In particular, it warned that their rise implied significant risks to the effectiveness of monetary policy, exchange rate management, capital flow management measures, and fiscal sustainability.
Moreover, it may require changes in central bank reserves and have implications for the global financial safety net, resulting in potential instability. Finally, banks may lose market share in deposits and have to restrict lending.
The report also said that the risks may be different depending on the economic conditions in each country.
However, they admit that despite the significant risks, the cryptocurrency space has developed technologies, such as cheaper and faster cross-border payments, but these can be exploited by governments to achieve their goals.