• February 28, 2024

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IMF: Cryptocurrencies Can Undermine Banking Sector Stability

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The International Monetary Fund has warned G20 countries of the potential pressures on the global banking system from the large-scale introduction of digital currencies, noting that such an influx of capital could lead to banks facing outflows of deposits and reducing their lending.

The IMF has also highlighted the lack of regulation in the cryptosphere as a main concern and called for El Salvador to repeal its law recognizing bitcoin as a means of payment, citing potential risks associated with the move.

In addition, the organization’s report was released shortly after banks such as Signature Bank, Silicon Valley Bank, and Silvergate Bank were affected by the blockchain industry.

The IMF has advised G20 countries to pay particular attention to the state of their reserves, as they may be needed to support financial institutions facing withdrawals and reducing their lending.