TL;DR Breakdown
- IMF economist says banning cryptocurrencies is not an option for the body.
- Economist says cryptos could help control capital flow and exchange rates.
International Monetary Fund (IMF) chief economist Gita Gopinath has said that banning cryptocurrencies is not an option for the IMF even as she acknowledges that digital currencies were proving to be a challenge for the emerging markets and that strict regulations were required.
According to the IMF economist, there are practical obstacles to banning cryptocurrencies because of its decentralized nature.
Gopinath, while speaking, also referred to other challenges with capital inflows and foreign exchange using that to call for a coordinated approach in regulating them. Gopinath’s comments come when governments across countries are looking to bring a Bill on cryptocurrency regulation.
Why placing a ban on cryptocurrencies is not practical
Speaking on why it’s not a practical approach to banning digital assets, Gopinath said emerging markets have exchange rate controls, capital flow controls, and cryptocurrencies can impact that.
“I think cryptocurrencies are a particular challenge for emerging markets. It would seem that cryptocurrencies are more attractive for emerging markets compared to developed economies. However, emerging markets have exchange rate controls, capital flow controls, and cryptocurrencies can impact that.
“Regulation is absolutely important for this sector. If people are using this as an investment asset, then the rules which are there for other investment classes should apply here as well, Gopinath said.
She added, banning cryptocurrencies would pose practical challenges and that a global policy on cryptocurrency was the need of the hour.
Gopinath meets PM Narendra Modi
The IMF economist met Prime Minister Narendra Modi. The Prime Minister’s Office (PMO) took to Twitter to share pictures from their meeting.
The meeting comes in the wake of an announcement by the IMF that its First Deputy Managing Director (FDMD), Geoffrey Okamoto, will resign next year, and Chief Economist Gita Gopinath will replace him.
Although Dr. Gopinath had been scheduled to return to her academic position at Harvard University in January next year, she decided to stay and accepted the new position, the IMF said in a statement.
“In particular, the FDMD will take the lead on surveillance and related policies, oversee research and flagship publications and help foster the highest quality standards for Fund publications,” the release noted.
