Cryptocurrencies do not pose an immediate danger, according to Lagarde (IMF)
Crypto assets like bitcoin or other virtual currencies do not pose an immediate danger to financial stability due to their still small presence and limited ties to the rest of the financial sector, according to the managing director of the International Monetary Fund (IMF), Christine Lagarde. Who has recommended regulators to remain "vigilant."
"Our preliminary evaluation is that given their small presence and their limited links with the rest of the financial sector, crypto assets do not pose an immediate danger ," says Lagarde in an article published by the institution, referring to the implications of the 'cryptos'. for financial stability.
However, the former French finance minister warns that regulators "should remain vigilant." Since they have the potential to magnify the risks of excessive leverage in the sale of assets. And to increase the transmission of economic shocks if they become more integrated into the most popular financial products.
Cryptocurrencies, a challenge for current business models
On the other hand, Lagarde points out that cryptocurrencies and fintech pose a challenge to the business models of banks and other financial entities in the event of a large-scale change from government-issued currencies to crypto assets .
Also, the French believes that regulators may find it more difficult to ensure the stability of a more diffuse and decentralized financial system. While central banks may have more trouble acting as a lender of last resort in case of crisis .
“In my opinion, the 'fintech' revolution will not eliminate the need for trusted intermediaries. As 'brokers' and bankers ”, emphasizes Lagarde. Expressing their confidence that decentralized applications will help diversify the financial landscape and improve the balance between centralized and decentralized services. Resulting in an ecosystem that is more efficient and potentially more robust.
In this way, the director of the IMF points out that understanding the risks to financial stability related to crypto assets "is vital" to distinguish between real threats and unfounded fears. "This is why we need a regulatory agenda that protects against risks without discouraging innovation," he says.
"Giddy gyrations of crypto assets like bitcoin invite comparisons to the tulip mania that swept Holland in the 17th century. And the recent bubble of the 'dotcom' », adds Lagarde. Warning that "with more than 1,600 crypto assets in circulation, it seems inevitable that many will not survive the creative destruction lost items fire emblem."
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