IMF Suggests New Strategy to Manage Cryptocurrency Risks
IMF creates a 3-step plan, C-RAM, to safely manage the use and risks of digital currencies like Bitcoin in countries worldwide.
The International Monetary Fund (IMF), a big international organization, is stepping into the world of cryptocurrencies like Bitcoin. They have introduced a special three-step plan named theCrypto-Risk Assessment Matrix (C-RAM) to help understand and manage the financial risks that come with these digital moneys in different countries.
In simple words, the IMF's approach, Crypto-RAM, helps countries understand and deal with the risks related to cryptocurrencies in a systematic way. The first step involves using a "decision tree method". This method looks closely at how big of an effect cryptocurrencies have on a country’s economy. This is called assessing its “macrocriticality”.
Secondly, the focus changes to measuring these crypto risks within a country’s economy. This is done through a method called "country risk mapping", where one key thing to understand is systemic importance. This is about figuring out how crucial crypto and other related things are to a country’s economy.
Lastly, the third step is about looking at cryptocurrencies from a worldwide viewpoint. But, the IMF points out that there is not enough data and rules related to cryptocurrencies to work with. Still, by using a table and the decision tree method, it suggests governments can use this approach to make new rules about crypto and see what might happen because of these.
Moreover, the IMF, along with the Financial Stability Board (FSB), an international body that monitors and makes recommendations about the global financial system, has warned against making big bans on crypto. Instead, they recommend putting into place certain rules, especially for those who provide crypto services, and making anti-money laundering rules stronger, which they believe is a better strategy than banning digital moneys completely.
