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The International Monetary Fund is concerned about global debt, as well as the growth of crypto.
The IMF has warned that the world faces another financial meltdown, following banks’ and governments’ failure to put right the causes of the last one, which started with the fall of Lehman's in 2008. The Fund has also issued a stark warning about bitcoin and crypto assets, stating that they could create new vulnerabilities in the financial system.
Debts are now far higher than they were before 2008, largely due to the measures policymakers used to address the last crisis. A shock in the financial system would lead to another crash, with potentially worse consequences, since all the tools used to fight the last one have been exhausted.
Christine Lagarde, head of the IMF, also said this of bitcoin and crypto: ‘Cybersecurity breaches and cyberattacks on critical financial infrastructure represent an additional source of risk because they could undermine cross-border payment systems and disrupt the flow of goods and services… continued rapid growth of crypto assets could create new vulnerabilities in the international financial system.’ However, she was also cautious about regulating the new forms of cash, due to the risk of stifling innovation.
The IMF is being forced to walk a difficult line, pronouncing judgment on a new form of money that goes against everything it knows and can control. It does not want to be seen as anti-tech and anti-innovation, and recognises the growing popularity of cash payments (the demand for euro notes is growing, for example).
But bottom line, if the wheels come off the global financial system again – and this time, worse than before – you’re going to want to be holding some crypto and especially bitcoin. Not simply because its value is likely to rise in a crisis. It’s because it stands outside the payments system and you’ll still have money that you can use in the event the banks are closed.
In other words, whatever else you do with your crypto, it could be wise to put a little BTC away to actually use to buy things one day.
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