Emerging markets can be undermined by the use of cryptocurrencies as payment instruments due to their unstable nature, Tobias Adrian, the financial counselor and director of the monetary and capital markets department at the International Monetary Fund (IMF), told Financial Times
MOSCOW (Pakistan Point News / Sputnik - 31st January, 2022) Emerging markets can be undermined by the use of cryptocurrencies as payment instruments due to their unstable nature, Tobias Adrian, the financial counselor and director of the monetary and capital markets department at the International Monetary Fund (IMF), told Financial Times.
Last week, the IMF described El Salvador's decision to adopt Bitcoin as legal tender as one that carries large risks for financial and market integrity and could lead to "contingent liabilities."
"Crypto is being used to take money out of countries that are regarded as unstable (by some external investors)," Adrian said, noting that sharp price fluctuations cause "destabilizing" capital flows in such markets.
The official went on to say that some emerging markets and developing economies are now facing grave risks after replacing their established currencies with crypto.
"Applying established regulatory tools to manage capital flows may be more challenging when value is transmitted through new instruments, new channels and new service providers that are not regulated entities," Adrian explained.
El Salvador President Nayib Bukele announced in November plans to build a Bitcoin city at the base of a volcano in the country, with the cryptocurrency used to fund the project.
