Why IMF’s Gita Gopinath sees challenges in banning cryptocurrency

December 17, 2021 09:54 AM AEDT | By Ashish

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Why IMF’s Gita Gopinath sees challenges in banning cryptocurrency — Image source: Wit Olszewski,Shutterstock

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Highlights

International Monetary Fund’s (IMF) chief economist Gita Gopinath has batted for a global policy on cryptocurrency.

She also said that cryptocurrency poses challenges to developing nations as these have exchange rate controls.

Gopinath’s comments came at a time when governments and central banks across the globe are mulling over the future of cryptocurrencies.

International Monetary Fund’s (IMF) chief economist Gita Gopinath has called for a global policy on cryptocurrency instead of banning it.

It would always be a challenge to ban cryptocurrencies as they operated from offshore exchanges and were not subject to regulation of a particular country, said Gopinath, who is slated to be the first deputy managing director of the IMF early next year.

"I think cryptocurrencies are a particular challenge for emerging markets. It seems to be more attractive to adopt cryptocurrencies and assets in emerging economies than in advanced economies," Gopinath said while addressing an event on ‘Global Recovery and Policy Challenges in 2022’ organised by the National Council of Applied Economic Research (NCAER) in India.

"Regulation is absolutely important for the sector (cryptocurrencies and assets). Countries around the world are trying different things, there is obviously challenges to banning (cryptocurrencies and assets)," the 50-year-old economist added.

She also said that cryptocurrency poses challenges to emerging and developing nations as generally these have exchange rate controls, capital controls, and capital flow measures. The cryptocurrency assets and currencies can be used to evade those regulations, she warned.

Gopinath’s comments came at a time when governments and central banks across the globe are mulling over the future of cryptocurrencies and scope of central bank backed cryptocurrency (CBDC).

International Monetary Fund’s (IMF) chief economist Gita Gopinath has called for a global policy on cryptocurrency instead of banning it.

Source: © Aoutphoto | Megapixl.com

The Indian government is planning to seek a cabinet approval for its cryptocurrency bill. There were reports earlier that the government was planning to introduce the official Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 during the Winter Session of Parliament.

Meanwhile, US Federal Reserve chair Jerome Powell on Wednesday said that even as the government agency should consider monitoring developments in the cryptocurrency space, cryptocurrencies are currently not a financial stability concern for US markets.

Earlier too, Powell had shared his concerns about cryptocurrency, while adding that he was not for banning the assets. However, he voiced the need for the regulation of stablecoins.

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