Yesterday the IMF Executive Board published a paper on crypto-assets with policy recommendations. Beyond the suggestions, the IMF said an outright ban on cryptocurrencies should not be the ‘first-best’ option. However, ‘a few’ directors believe a crypto ban should be on the table. Counterbalancing this view is a desire to encourage innovation and use blockchain for public policy objectives.
The key recommendations fall into three themes: macroeconomic, legal and regulatory, and international coordination.
On the macroeconomic front, given that the IMF’s key role is to foster international financial stability, it wants to ensure that individual economies remain stable. For some countries with less robust local currencies, there’s a real risk that citizens opt to hold assets in blockchain-based stablecoins dominated in dollars rather than the local currency. Hence there’s a potential monetary sovereignty risk.
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