Crypto risks to destabilize emerging countries, says a high-ranking IMF official

strong price fluctuations in cryptocurrencies cause "destabilizing" capital currents in emerging countries, and the use of crypto instead of traditional currencies harbors "immediate and acute risks", according to a high -ranking official of the IM/P>

"crypto is used to get money out of countries that are considered unstable [by some external investors]," said Tobias Adrian, the financial advisor of the IMF and head of his department for money and capital markets.

"It is a major challenge for political decision -makers in some countries," said Adrian in an interview with the Financial Times and found that "the markets for cryptocurrencies have lost about $ 1 trillion in value since the highlight".

The IWF asked El Salvador to no longer recognize Bitcoin as a legal means of payment, and repeated his warning that the official introduction of digital assets last year was "great risks" for the stability and integrity of the financial system of the country.

NAYIB Bukele, the President of El Salvador, who is aiming for a financing of more than $ 1 billion from the IMF, plans to obtain money through the sale of bonds that are bound to the largest cryptocurrency in the world. The program was criticized by some international investors who have already had guilt titles issued by the government.

Adrian said that some threshold and developing countries are now exposed to “immediate and acute risks” because their existing established currencies are replaced by crypto-assets, a process that is called “cryptoization”.

"Capital flow management measures must be finely coordinated in view of the cryptoization," said Adrian. "The application of established regulatory instruments for the management of capital streams can be more difficult if values ​​are transmitted via new instruments, new channels and new service providers that are not regulated companies."

Signs of a closer correlation between the performance of cryptocurrencies and other financial systems in industrialized countries, such as US technology stocks, government bonds and even crude oil, are also worried.

civil servants of the fund based in Washington believe that strong deleveraging episodes lead to sales on the stock markets in cryptocurrencies.

"The correlation between crypto and stock markets has tended to the top. Crypto is now very closely connected to what happens in shares. We cannot simply dismiss it," said Adrian.

The IMF has asked the national and global regulatory authorities to establish a coordinated, consistent and comprehensive approach to monitoring cryptocurrencies-a discouraging task in view of the speed, with which digital assets get into the mainstream financing.

"to agree on global regulations is never quick. But if we start now, we can achieve the goal of maintaining financial stability and at the same time use the advantages that the underlying technological innovations bring with it," said Adrian.