IMF advises that the exponential expansion of cryptocurrencies threatens financial stability

[Redaktion]

IMF warns against 'cryptoisation' which refers to the preference of dealing with crypto assets rather than local currencies. While cryptocurrencies may be innovative and introduce benefits to consumers, they can destabilize and generate risks to the financial system of countries.

https://www.notebookcheck.net/IMF-advises-that-the-exponential-expansion-of-cryptocurrencies-threatens-financial-stability.569545.0.html

[LL]

Says the organisation that represents the biggest creators of money in the world...

[L]

@LL
Elon Musk's tweet causes more fluctuations than printing money.. No economy can rely on such unstable currency..

[Anonymousgg]

@L
Speaking of, we need some asteroid mining to disrupt things a little more.

[_MT_]

@LL
Elon Musk's tweet causes more fluctuations than printing money.. No economy can rely on such unstable currency..

Printing can lead to a higher inflation rate but it doesn't have to cause any fluctuation as long as the central bank behaves predictably. Also, it's important to note that inflation benefits those in debt. It makes it easier to pay off those debts. Which can be important to an economy. If companies can pay their debts, it means they are not going bankrupt. People keep their jobs and they keep manufacturing and paying taxes. Governments are huge debtors. It's understandable that people don't like inflation. But money is a working fluid of the economy. You're not meant to store wealth in it. Yes, protecting your wealth is work. And sometimes you lose. But it's more important to protect the economy. Your life can depend on it.

One has to realize that if money were to gain value, it would make it more difficult to pay off debts. People would be less motivated to lend. And fewer people would be able to get access to loans. That's why deflation is such a scarecrow to central bankers. Because it rewards hoarding of wealth rather than spending, it could have a very interesting effect on the environment. But I can't even begin to imagine what such an economy would look like. I'm not sure anyone can. And that's not even mentioning the huge volatility that current cryptocurrencies display. It's unfathomable to use such a thing as a currency for actual trade. There is a reason why the primary responsibility of a central bank should be stability.