Gita Gopinath, the International Monetary Fund’s chief economist, says that cryptocurrencies are proving to be a challenge for emerging markets and warrant stringent regulation.
The IMF‘s chief economist, Gita Gopinath, called for an urgent global policy on cryptocurrencies at an event organized by the National Council of Applied Economic Research (NCAER). Developing economies should regulate them rather than ban them, she said.
The IMF’s new first deputy managing director, Gopinath, had even called on Prime Minister Narendra Modi on Wednesday.
The economist added that cryptocurrency is not a “global threat at this point”.The decentralized nature of digital currencies, however, poses a practical obstacle in banning them.
During a lecture on ‘Global Recovery and Policy Challenges in 2022’ held by the NCAER she sought regulation for crypto assets and currencies, especially for emerging and developing economies, as banning them may not be as effective because crypto exchanges are located offshore, which makes it easier to trade in them despite the bans.”
A majority of emerging economies usually have rules around overseas transactions, so the adoption of cryptocurrencies may present a challenge to them. Considering the complex cross-border transactions, Gopinath said that “there is a need for a global policy on it urgently.”
Since most emerging economies have exchange rate controls, capital controls and capital flow measures, crypto assets and currencies can be used to circumvent those regulations,” Gopinath noted.
During the upcoming Winter Session of Parliament, India is unlikely to introduce its long-awaited Cryptocurrency Bill. The bill was intended to “create a facilitative framework for the creation of a digital currency to be issued by the Reserve Bank of India”, according to the government’s legislative business for the Winter Session.
As per the Lok Sabha website, the Bill even proposes to prohibit all private cryptocurrencies in India. However, it stipulates that some exceptions can be made to promote the underlying technology and uses of cryptocurrencies.
A bill on cryptocurrency regulation is being mulled by the government at this time. In any case, the chances of it being tabled in the House seem slim, as the Union Cabinet did not take up the bill for consideration on Wednesday and the Winter Session of Parliament ends on December 23.
