IMF reiterates more oversight for crypto in latest report on financial stability

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Cointelegraph 12 October, 2021 - 12:15pm

The group identified the crypto space at risk from hacking, “lack of transparency around issuance and distribution” of tokens, and operational risks including outages during periods of extreme volatility.

In its Global Financial Stability Report released on Tuesday, the International Monetary Fund, or IMF, said the adoption of crypto assets and stablecoins in emerging markets and developing economies could pose a challenge to those countries’ macroeconomic and financial stability. The group said the risks were “contained for now,” but urged regulators to monitor cryptocurrencies and keep them in check.

The IMF added that as the crypto space expanded and evolved, “new sources of risk” were emerging, such as stablecoins and decentralized finance, or DeFi. Specifically, the group identified the space at risk from hacking as having a “lack of transparency around issuance and distribution” of tokens, and operational risks including outages during periods of extreme volatility. It also labeled “meme tokens” and centralization — a major exchange like Binance handling a large amount of trading volume, while Tether is responsible for the majority of the supply of stablecoins — as factors to consider.

“So far, losses as a result of such risks have not had a significant impact on financial stability, globally or domestically,” said the IMF. “However, as crypto assets grow, the macro-criticality of such risks is likely to increase.”

Related: IMF issues veiled warning against El Salvador’s Bitcoin Law

Highlighting the risks of developing countries adopting digital assets is a common tagline for the IMF, with the group having previously reported on the challenges of central bank digital currencies and stablecoins. The group has warned both the Marshall Islands and El Salvador that recognizing a digital currency as legal tender could “raise risks to macroeconomic and financial stability as well as financial integrity.”

Earlier this month, the IMF released a set of policies for the emerging markets and developing economies to ensure financial stability amid global crypto adoption, given managing director Kristalina Georgieva’s claim that more than half of all central banks in the world are exploring how to launch digital currencies. Recommendations from the group included lawmakers “implement[ing] global standards for crypto assets and [enhancing] their ability to monitor the crypto ecosystem by addressing data gaps.”

Read full article at Cointelegraph

The IMF's Crisis Goes Way Beyond Whether Georgieva Survives as Leader

Bloomberg 12 October, 2021 - 10:20pm

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The IMF executive board met Sunday to hear from a law firm whose investigators concluded that managing director Kristalina Georgieva (pictured) manipulated data in favour of China while she held a senior role at the World Bank.

Data-rigging allegations against International Monetary Fund managing director Kristalina Georgieva were set to loom over the opening of week-long IMF-World Bank annual meetings on Monday as the Fund’s executive board failed to conclude its review after yet another marathon meeting.

The IMF board met on Sunday with Georgieva and the law firm that claims she pressured World Bank staff to change data to boost China’s “Doing Business” ranking when she was World Bank CEO in 2017, the IMF said in a statement, adding that the board had sought to “clarify details” in the review.

“The board made further significant progress today in its assessment with a view to very soon concluding its consideration of the matter,” the Fund said.

The 24-member IMF board plans to meet again on Monday to decide Georgieva’s future at the helm of the global crisis lender, people familiar with the plans said.

One source familiar with the discussions expressed confidence that the IMF chief would be cleared by the board.

France and other European governments on Friday backed the Bulgarian economist to complete her term as IMF chief, while U.S. officials and others had sought more time to study the differing accounts about data irregularities in the World Bank’s now-cancelled flagship “Doing Business” report.

The scandal threatens to overshadow the high-profile meetings, where Georgieva will take a lead role in discussions on global recovery from the COVID-19 pandemic, debt relief and efforts to speed vaccinations, along with World Bank president David Malpass.

The IMF’s executive board debated the matter for five hours on Friday before adjourning and scheduling separate meetings on Sunday with Georgieva and attorneys from the WilmerHale law firm. Those meetings stretched late into Sunday night.

Georgieva has strongly denied the allegations, which date back to 2017, when she was the World Bank’s chief executive. She became the IMF’s managing director in October, 2019.

WilmerHale’s investigation report prepared for the World Bank board alleged that Georgieva applied “undue pressure” on bank staff at the time to make data changes to boost China’s ranking in the flagship “Doing Business” report, just as the bank was seeking Beijing’s support for a major capital increase.

Georgieva’s lawyer says the WilmerHale probe violated World Bank staff rules in part by denying her an opportunity to respond to the accusations, an assertion the law firm disputes.

No comment was immediately available from Georgieva or the law firm about Sunday’s meetings.

The Financial Times on Sunday reported that the United States and Japan want Georgieva out of the job, without citing any specific sources.

The U.S. Treasury, which controls 16.5 per cent of the IMF’s shares, declined to comment on the FT report. No comment was immediately available from the Japanese embassy in Washington.

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CNBC Television 12 October, 2021 - 10:20pm

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