IMF Calls for Global Talks on CryptocurrenciesBy and
Lender echoes Treasury concerns about criminal use of cryptos
The debate comes as Bitcoin goes mainstream, seesaws in value
The International Monetary Fund is calling for global coordination on cryptocurrencies as it warned of the risks from surging prices.
“Greater international discussion and cooperation among regulators, yes, would be helpful,” IMF spokesman Gerry Rice told reporters Thursday in Washington.
While Rice didn’t elaborate on what type of coordination is needed, the push for action comes as digital currencies such as Bitcoin become an investment phenomenon and household name. Bitcoin’s value soared last year and attracted mainstream investors, who are seeing unpredictable gains and losses.
“When asset prices go up quickly, risks can accumulate, particularly if market participants are borrowing money to buy,” Rice said. “It’s important for people to be aware of the risks and take the necessary risk-management measures.”
The IMF is not alone in recommending greater coordination on digital currencies.
Treasury Secretary Steven Mnuchin last week called for the Group of 20 nations to prevent cryptocurrencies from becoming the digital equivalent of an anonymous Swiss bank account. The U.S. wants to ensure “bad people cannot use these currencies to do bad things.”
While the currencies have potential benefits such as payment efficiency, their dangers goes beyond losses for individual investors, Rice said. “Cryptocurrencies can pose considerable risks as potential vehicles for money laundering, terrorist financing, tax evasion and fraud,” he said.
The Washington-based IMF was conceived during the Second World War to oversee the Bretton Woods system of pegged exchange rates. Though the fund has evolved since its creation into a lender of last resort for indebted nations, its views on currencies still carry special weight, given its traditional role.
Managing Director Christine Lagarde in September cautioned that cryptocurrencies could eventually become a headache for central bankers as they increase in popularity. “Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays. So I think it may not be wise to dismiss virtual currencies,” she said.