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Emerging market ‘cryptoization’ threatens financial stability

by Mike Robinson

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© Reuters. FILE PHOTO : This illustration, taken on June 29, 2021, shows the representations of cryptocurrencies Bitcoin (Ethercoin, DogeCoin and Ripple), as well as Ripple and Litecoin. REUTERS/Dado Ruvic/Illustration/File Photo

Tom Wilson

LONDON, (Reuters) – The advent of digital currency in emerging markets may lead to “cryptoization”, the International Monetary Fund warned on Friday. This could potentially undermine capital and exchange controls, and cause financial instability.

and its kin have in the last year soared in price and popularity, with emerging and developing market economies such as Vietnam, India and Pakistan seeing rapid growth in some measures of adoption, according to https://blog.chainalysis.com/reports/2021-global-crypto-adoption-index U.S. blockchain researcher Chainalysis.

In theory, cryptocurrencies can be used to transfer money between countries faster and more cheaply. Stablecoins and other digital tokens like stablecoins are being promoted by backers as a way to protect savings against high inflation or fluctuation in local currency.

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