Economic professor warns cryptocurrencies can contribute to monetary and financial instability - Economics
Economic professor warns cryptocurrencies can contribute to monetary and financial instability - Economics
The economic professor of Cornell University and former head of the IMF CHINA department, Eswar Prasad, warned that "cryptocurrencies can contribute to monetary and financial instability". He added that the risk is reinforced if the industry is not regulated and there is no investor protection.
economist sees crypto as a risks of financial stability
Eswar Prasad, Nandlal P. Tolani Senior Professor of Trade Policy and Professor of Economics at the Charles H. Dyson School of Applied Economics and Management at Cornell University, shared his opinion on cryptocurrency in an interview with CNBC published on Wednesday.
Prasad is also a senior fellow at the Brookings Institution, where he held the New Century Chair in International Economics, and research assistant at the National Bureau of Economic Research. Previously, he was head of the financial studies department in the research department of the International Monetary Fund (IMF) and head of the China department of the IWF.
he said:
cryptocurrencies can contribute to monetary and financial instability, especially if they produced a large and unregulated financial system that lacks investor protection.
his statement reflects a report recently published by the IWF warning that the increasing popularity of cryptocurrencies could be a threat to financial stability. In addition, the deputy governor of the Bank of England, Jon Cunliffe, said this week that regulation is urgently needed, since the crypto industry grows quickly and it grows quickly Reasons ”to believe that it could be risks to the country's financial stability in the future, even if the risks currently exist limited .
Professor Prasad was also asked how cryptocurrencies could increase economic inequality. "Cryptocurrencies and its underlying technology promise democratization of the financial system by making digital payments and other financial products and other financial products and services easily accessible to the masses," he replied. "But due to existing inequalities in digital access and financial competence, they could make inequality in the end."
In addition, he emphasized that "all financial risks that result from investing in cryptocurrencies and related products could ultimately fall on naive private investors".
The Cornell Professor of Economics also discussed the digital currencies of the central banks (CBDCS) and explained:
I think the digital currencies of the central banks are the path of the future. But every central bank will want to ensure that your money will not be used for illegal purposes so that transactions can be checked and understandable.
However,Prasad noted that "if every payment you make, even for a cup of coffee or for a sandwich, can be viewed by a government agency, this is an uncomfortable offer." The economist concluded: "In a more dystopic world, the government could be decided what kind of goods and services their money can be used for."
Do you agree with the economic professor? Let us know in the comment area below.
Bedy verification : Shutterstock, Pixabay, Wiki Commons