{"id":130170,"date":"2021-08-31T16:12:43","date_gmt":"2021-08-31T10:42:43","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=130170"},"modified":"2021-09-01T18:19:44","modified_gmt":"2021-09-01T12:49:44","slug":"adopting-crypto-assets-as-currency-is-a-risky-bet-imf","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/adopting-crypto-assets-as-currency-is-a-risky-bet-imf\/","title":{"rendered":"Adopting crypto assets as currency is a risky bet: IMF"},"content":{"rendered":"\n<p><strong>Source<\/strong>: This post is based on the article \u201c<span style=\"color: #000000;\"><strong>Adopting crypto assets as currency is a risky bet: IMF<\/strong><\/span>\u201d published in Livemint on 31<sup>st<\/sup> August 2021.<\/p>\n<h5><strong>What is the news?<\/strong><\/h5>\n<p>The International Monetary Fund (IMF) has warned that adoption of crypto assets such as\u00a0Bitcoin\u00a0as national currency can impact a country\u2019s macroeconomic stability.<\/p>\n<p>The warning came ahead of the Central American nation, El Salvador, officially adopting the world\u2019s most popular decentralized digital currency, Bitcoin, as a legal tender from 7<sup>th<\/sup> September.<\/p>\n<table style=\"width: 100%; border-collapse: collapse; background-color: #f7f2f2;\">\n<tbody>\n<tr>\n<td style=\"width: 100%;\"><strong>Must Read<\/strong>: <span style=\"color: #0000ff;\"><strong><a style=\"color: #0000ff;\" href=\"https:\/\/forumias.com\/blog\/el-salvador-makes-bitcoin-a-legal-currency\/\" target=\"_blank\" rel=\"noopener\">El-Salvador makes bitcoin a legal currency<\/a><\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h5><strong>What did IMF say?<\/strong><\/h5>\n<p>Many cryptocurrencies are indeed secure, easy to access, and cheap to transact. However, that in most cases risks and costs outweigh potential benefits.<\/p>\n<p><span style=\"text-decoration: underline;\"><strong>Risks<\/strong><\/span><\/p>\n<ul>\n<li><strong>Substantial risks with bitcoin<\/strong>: Privately issued crypto-assets like bitcoin come with substantial risks. Making them equivalent to a national currency is an inadvisable shortcut.<\/li>\n<li><strong>Too much volatility<\/strong>: Households and businesses would have very little incentive to price or save in a parallel crypto asset such as Bitcoin, even if it were given legal tender or currency status. Their value is just too volatile and unrelated to the real economy.<\/li>\n<li><strong>Wastage of time<\/strong>: If goods and services were priced in both a real currency and a crypto-asset, people would spend significant time and resources choosing which money to hold as opposed to engaging in productive activities.<\/li>\n<li><strong>Exchange-rate risks to govt<\/strong>: Similarly, government revenues would be exposed to exchange rate risk if taxes were quoted in advance in a crypto asset while expenditures remained mostly in the local currency, or vice versa.<\/li>\n<li><strong>Banks and other financial institutions could also be exposed<\/strong> to the massive fluctuations in crypto-asset prices.<\/li>\n<\/ul>\n<p><span style=\"text-decoration: underline;\"><strong>Potential Benefits<\/strong><\/span><\/p>\n<p>However, new digital forms of money have some benefits too, like<\/p>\n<ul>\n<li>the potential to provide cheaper and faster payments<\/li>\n<li>enhance financial inclusion<\/li>\n<li>improve resilience and competition among payment providers<\/li>\n<li>facilitate cross-border transfers<\/li>\n<\/ul>\n<p>But doing so is not straightforward.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source: This post is based on the article \u201cAdopting crypto assets as currency is a risky bet: IMF\u201d published in Livemint on 31st August 2021. What is the news? The International Monetary Fund (IMF) has warned that adoption of crypto assets such as\u00a0Bitcoin\u00a0as national currency can impact a country\u2019s macroeconomic stability. The warning came ahead&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/adopting-crypto-assets-as-currency-is-a-risky-bet-imf\/\">Continue reading <span class=\"screen-reader-text\">Adopting crypto assets as currency is a risky bet: IMF<\/span><\/a><\/p>\n","protected":false},"author":10328,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1566,3127,9],"tags":[2498,4105,8716],"class_list":["post-130170","post","type-post","status-publish","format-standard","hentry","category-daily-factly-articles","category-economy","category-public","tag-cryptocurrency","tag-digital-currency","tag-money-and-banking","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704765017},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/130170","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10328"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=130170"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/130170\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=130170"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=130170"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=130170"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}