MILANO – A world of opportunities and just as many risks, which it is time for the International Monetary Fund to address. The cavalcade (made up of ups and downs) of crypto assets (Bitcoin, stablecoin and so on) ends in a chapter of the outlook on the trend of the global economy, which the Washington organization has anticipated. “Easy and fast payments. Innovative financial services. Inclusive access from non-banked parts of the world“, are the beneficial effects linked to the development of these technologies recalled by a blog of IMF economists.
Recalling that the market capitalization of crypto assets exceeded $ 2 trillion in September, with exchange platforms, digital wallets, issuers and miners (those who dig digital currencies online with their supercomputers) growing accordingly. “Many of these entities have deficiencies in operations, governance and risky practices,” note the experts. For example, blackouts of services are frequent on trading platforms, especially when markets are more turbulent. Inconveniences that up to now have not undermined the stability of the financial system as a whole, but whose degree of danger increases with their spread.
Among the risks mentioned, that of consumer protection deserves the first place. The IMF notes that over the years 16 thousand tokens have been issued on the various platforms, but today there are about 9 thousand in existence. The others? “They have somehow disappeared.” Beyond those extinguished by their creators, it is not excluded that some were born only for speculative purposes or even for fraud.
Regulators then tackle the problem of anonymity, which prevents them from gathering the necessary information and opens the door to distortions such as money laundering and illicit financing. Moreover, everything is complicated by the fact that the framework of the rules is not uniform.
However, given that trade has increased dramatically in 2021, this is an issue that needs to be addressed. Cryptoization, the adoption of these increasingly popular digital assets, “can reduce the ability of central banks to effectively implement monetary policy. And it can also pose risks to financial stability.” With the potential role of facilitator of tax evasion, fiscal policy also has to worry about the matter. Migrating mining out of China is also a risk factor as it impacts energy use.
Faced with these challenges, the IMF’s proposal is to first coordinate the protection of the crypto ecosystem between countries. Global regulatory standards need to be extended internationally. Especially in emerging countries, where cryptoization is more popular, authorities should consider issuing their own digital currencies and improving payment systems in order to cut the competitive advantages of digital assets.
Savona (Consob): “Regulate them to avoid imbalances”
Even the president of Consob, Paolo Savona, spoke today on the tima in a lectio magistralis in Cagliari in which he remarked that the States and the authorities must make an effort to be able to integrate cryptocurrencies into their institutional and regulatory framework, overcoming the “inadequacy of their knowledge”, so as to avoid “guidance” by the market, which would act “ignoring the history of its failures” and would risk generating “imbalances that the ‘man in the street’ will suffer”.
“Some calculations indicate that around six thousand cryptocurrencies are in circulation today” with a volume of transactions “in the order of 2.2 trillion billion dollars equivalent”. An impetuous growth, fueled “by the attraction exercised on investors by the earnings recorded by Bitcoins” and which has increased “the concerns of the authorities about the systemic effects” of cryptocurrencies without the “flood of detailed analyzes of the phenomenon” being followed by decisions “to at a global level, despite being the latter – Savona warns – the most urgent problem to be solved for the proper functioning of the payment system and international financial relations “.
Reviewing the risks associated with a “cryptoization” of the economy, Savona urges the calling of “an urgent international monetary conference of the type held in Bretton Woods” to define “the development of an economics with cryptocurrency”.
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