IMF Develops Crypto Risk Assessment Method

Global financial regulators are increasingly concerned about the rapid growth of the cryptocurrency market. The International Monetary Fund (IMF) has just proposed a matrix for assessing national-level cryptocurrency-related risks to countries worldwide. This was on September 29th. Details follow.

IMF Shows Countries How to Assess Crypto Risks

Convinced of the potential of cryptocurrencies, the IMF wants to assist countries in assessing their vulnerability to cryptocurrency-related risks. The institution has, in fact, published a document titled ‘Assessment of Macrofinancial Risks Related to Crypto Assets’ on September 29th.

In the document, it proposes a matrix called the ‘Crypto Asset Risk Assessment Matrix‘ (C-RAM). The matrix consists of three steps for identifying crypto risks and implementing appropriate policy responses.

The first step involves assessing the macro-criticality of cryptocurrencies, i.e., their ability to influence the macroeconomy. The evaluation of this macro-criticality is done through a decision tree provided by the international institution.

The second step involves monitoring the entire cryptocurrency sector at the national level. This monitoring is done using indicators similar to those used for monitoring the traditional financial sector. As for the third step, it involves evaluating the impact that cryptocurrencies can have on the systemic risk assessment of countries that have adopted them.

IMF paper proposes framework to assess systemic risk from crypto assets https://t.co/vgV7sGR1Du

— The Block (@TheBlock__) October 2, 2023

The Beginnings of a Global Crypto Skepticism Campaign?

Although the IMF is a reputable financial institution, there is no proof that its ‘Crypto Asset Risk Assessment Matrix’ is objective. In this era of the gradual merger between traditional finance and crypto finance, this matrix may be intended to promote crypto skepticism in countries.

Indeed, the International Monetary Fund has never had a favorable position on cryptocurrencies. The institution has repeatedly urged El Salvador to reverse its decision regarding Bitcoin, the queen of cryptocurrencies. It predicted that the adoption of Bitcoin as legal tender in El Salvador would have disastrous consequences for the country’s financial system.

However, all of the institution’s predictions for El Salvador have failed so far. This publication by the organization may be seen as a new attempt to curb global cryptocurrency adoption. Perhaps it is also a step in a potential project to create global cryptocurrency regulations!