According
to a
report by Bloomberg, the International Monetary Fund (IMF) has called for global
coordination on cryptocurrencies, warning of the risks of surging prices.
Bloomberg
quoted IMF Spokesman Gerry Rice commenting on the development of digital currencies
that “greater international discussion and cooperation among regulators would
be helpful”.
The recommendation for greater coordination on digital
currencies is a result of growing risks of surging prices. Rice warned that “when
asset prices go up quickly, risks can accumulate, particularly if market
participants are borrowing money to buy.”
Although
Rice did not specify the type of coordination
the international community should work on, he stated that, “it is important
for people to be aware of the risks and take the necessary risk-management
measures.”
This is not the first time for IMF to point out the
potential challenge that central bankers would eventually face in regulating cryptocurrencies
as they rise in popularity. Last September, IMP Managing Director Christine
Lagarde cautioned
that “it may not be wise (for central bankers and authorities) to dismiss
virtual currencies.”
There has been increasing demands for more global
discussion on cryptocurrencies. Echoing this call for closer international cooperation
include French Finance Minster Bruno Le Maire who announced
that France will propose to the G20 President Argentina that the group to discuss
on cryptocurrency regulations at the G20 Summit in April this year.
Earlier this month, Reuters also quoted
Director of Germany’s central bank Bundesbank Joachim Wuermeling commenting that “effective regulation of virtual currencies
would therefore only be achievable through the greatest possible international
cooperation, because the regulatory power of nation states is obviously limited”.
Back to Asia-Pacific region, authorities are also aware
of rife speculation of digital currencies. Some attempts have been made to
regulate virtual currency exchanges. For example, China has banned initial coin
offerings and shut down local cryptocurrency trading exchanges.
Other than the risks of surging prices, authorities around
the world are also aware of cryptocurrencies posing considerable risks as potential
vehicles for criminal activities such as money laundering, terrorist financing,
tax evasion and fraud. Just earlier this month, the US Treasury Secretary
Steven Mnuchin said the US is working with other G-20 leaders to make sure that
“bad people cannot use these (digital) currencies to do bad things”, according
to a
CNBC report.
