IMF Warns Stablecoins Could Pose 'Contagion Risk' to Global Financial System

[Markuri33]

A new report by the International Monetary Fund argues for regulations that ensure investors know how stablecoins are backed. Add the International Monetary Fund (IMF) to the list of institutions wary of stablecoins' growing influence.

In its 2021 Global Financial Stability Report, the IMF says cryptocurrency doesn't yet pose a systemic threat to the international system but that "risks should be closely monitored given the global implications and the inadequate operational and regulatory frameworks in most jurisdictions."To address those inadequacies, it calls for "global standards for crypto assets." Doing so, it believes, could help fend off a "contagion risk" to other markets.

The IMF holds huge sway. It is an intergovernmental body of 190 member states that promotes global trade, poverty reduction, and stable monetary policies. It uses dues from its members to provide loans to other members who agree to its terms. According to an April 2021 fact sheet, it has about $1 trillion available for such loans, a little under half of the total cryptocurrency market cap.