A managing director at the International Monetary Fund (IMF) reportedly thinks that increased use of cryptocurrencies could be one consequence of the war between Russia and Ukraine.
In a new Financial Times (FT) report, IMF first deputy managing director Gita Gopinath says that the wide-ranging international sanctions imposed upon Russia could fragment the existing economic world order.
Gopinath believes crypto assets, central bank digital currencies (CBDCs) and stablecoins could see increased adoption in response. The need for regulation would then follow.
Gopinath says,
“All of these will get even greater attention following the recent episodes, which draws us to the question of international regulation.
There is a gap to be filled there.”
Gopinath also tells FT that US dollar dominance is likely to lessen as a result of the sanctions the United States put in place as a response to Russia’s February 24th invasion of Ukraine.
Back in December, the IMF warned as part of a push for international regulation that as the nearly $2.5 trillion crypto market becomes more interlinked with the traditional financial system, systemic financial stability risks could arise in certain countries.
The institution followed up in January by discussing how the rising popularity of cryptocurrencies combined with their price volatility could negatively affect traditional markets.
More recently, the IMF’s managing director Kristalina Georgieva said that the organization favors CBDCs over cryptocurrencies.
“If CBDCs are designed prudently, they can potentially offer more resilience, more safety, greater availability, and lower costs than private forms of digital money.
That is clearly the case when compared to unbacked crypto assets that are inherently volatile.”
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