International Monetary Fund calls for more international cooperation on cryptocurrency
According to a report by Bloomberg, the International Monetary Fund (IMF) has called for global coordination on cryptocurrencies, warning of the risks of surging prices.
Bloomberg quoted IMF Spokesman Gerry Rice commenting on the development of digital currencies that “greater international discussion and cooperation among regulators would be helpful”.
The recommendation for greater coordination on digital currencies is a result of growing risks of surging prices. Rice warned that “when asset prices go up quickly, risks can accumulate, particularly if market participants are borrowing money to buy.”
Although Rice did not specify the type of coordination the international community should work on, he stated that, “it is important for people to be aware of the risks and take the necessary risk-management measures.”
This is not the first time for IMF to point out the potential challenge that central bankers would eventually face in regulating cryptocurrencies as they rise in popularity. Last September, IMP Managing Director Christine Lagarde cautioned that “it may not be wise (for central bankers and authorities) to dismiss virtual currencies.”
There has been increasing demands for more global discussion on cryptocurrencies. Echoing this call for closer international cooperation include French Finance Minster Bruno Le Maire who announced that France will propose to the G20 President Argentina that the group to discuss on cryptocurrency regulations at the G20 Summit in April this year.
Earlier this month, Reuters also quoted Director of Germany’s central bank Bundesbank Joachim Wuermeling commenting that “effective regulation of virtual currencies would therefore only be achievable through the greatest possible international cooperation, because the regulatory power of nation states is obviously limited”.
Back to Asia-Pacific region, authorities are also aware of rife speculation of digital currencies. Some attempts have been made to regulate virtual currency exchanges. For example, China has banned initial coin offerings and shut down local cryptocurrency trading exchanges.
Other than the risks of surging prices, authorities around the world are also aware of cryptocurrencies posing considerable risks as potential vehicles for criminal activities such as money laundering, terrorist financing, tax evasion and fraud. Just earlier this month, the US Treasury Secretary Steven Mnuchin said the US is working with other G-20 leaders to make sure that “bad people cannot use these (digital) currencies to do bad things”, according to a CNBC report.