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Bitcoin Takes Nosedive After Investors React to IMF Ruling

  By David Drake   In its World Economic Outlook published last month, the International Monetary Fund (IMF) cited that vigorous growth of digital currencies and the premature celebration of the cryptocurrency movement could potentially create vulnerabilities within the international financial system (IFS). Immediately after the IMF made this announcement, prices of major cryptocurrencies, including bitcoin, plummeted, resulting to a $13 billion loss in total market capitalization within minutes. Skeptics of this viewpoint are of the opinion that these ‘vulnerabilities’ come in the form of a system of cross-border payments which are outside the control of the IMF. This challenge has left the 189-member group considerably nervous about the future considering the rapid growth and acceptance of cross-border payment systems in influential countries such as Singapore. Key Vulnerabilities As governments and individuals rapidly take to digital financial assets, world bodies fear they will not be able to manipulate or control ... Read More »

What are Reasons Behind IMF’s Warning Against Cryptocurrencies?

  By David Drake   This past month, the International Monetary Fund (IMF) became the first global financial body to raise alarm over the fast growth of virtual assets and the impact this new asset class could have on the global financial market. The IMF warning comes just a month after the UK government issued a statement that branded the cryptocurrency industry a ‘wild west’. This is not the first time the IMF is raising concerns about cryptocurrencies. In February of this year, IMF’s Chief, Christine Lagarde, went on record saying the Fund was concerned with the fact that digital currencies can be used in illegal financial transactions with ease. This means that global regulatory actions are critical in the industry. According to the Fund, delays in enacting and implementing such regulation only makes the industry more vulnerable to financial risk. John Hoelzer, founder and CEO of ONe Network, agrees ... Read More »

What are the Long-term impacts of IMF’s Announcement on Digital Currencies?

  By David Drake   Growth of the crypto market has largely been viewed positively by many players in terms of its contribution to the global economy. However, to other economic players, cryptocurrencies are increasingly becoming a risk to both consumers and investors. Just recently, global financial institution, the International Monetary Fund (IMF) stated that there are possibilities that virtual currencies could ‘create new vulnerabilities in the international financial system.’ While noting the possible benefits of cryptocurrencies, the IMF narrowed its concerns to security and their possible utilization in illegal activities. According to the financial agency, the regulatory control issues, hackings and online security threats facing the cryptocurrency industry make it highly vulnerable and that there is likelihood that this could challenge international payment structures and interrupt exchange of goods and services. Short vs Long-Term Impacts To a large extent, the IMF considers the cryptomarket as relatively young, one that ... Read More »

Will IMF’s Recent World Economic Output Report have a Long-term Effect on the Crypto Market?

  By David Drake   One sector that is set to experience revolution since the emergence of digital currencies is the financial industry. This is because blockchain, the technology that underlies cryptocurrencies offers several advantages to the sector.  Unlike the current centralised financial systems that are costly, time-consuming and highly dependent on intermediaries, blockchain-based systems tend to be cheaper, fast and intermediary free. With increased popularity, blockchain technology has captured the attention of global financial institutions. In April this year, International Monetary Fund (IMF) head acknowledged that distributed ledger technology behind bitcoin and other digital currencies could increase efficiency of the current financial systems. But in a surprising turn of events, the IMF has recently issued warnings over digital currencies. The global financial institutions has stated that digital currencies “could create new vulnerabilities in the international financial system” in its world economic output publication. Key Concerns In the publication, the ... Read More »

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