Don’t Ban but Regulate Crypts: IMF’s Gita Goliath

Emerging economics should regulate cryptocurrencies instead of banning them, International Monetary Fund (IMF) chief economist Gita Goliath said on Wednesday she called for an urgent global policy on the issue.

“Regulating crypto assets and currencies is essential, especially for emerging and developing economies, as banning them may not work as crypto exchanges are located offshore, which makes it easier for an individual to trade in them despite the ban,” Goliath said, delivering a lecture on ‘Global Recovery and Policy Challenges in 2022’ organized by National Council of Applied Economic Research (NCEAR). No individual country could solve this problem on its own given the complex cross-border transactions, she said. “There is a need for a global policy on it urgently.”

She cautioned that the adoption of crypts poses a challenge to emerging and developing economies as most of them typically had regulations around foreign transactions. “Crypts pose problems as usually emerging developing economies have exchange rate controls, capital controls, and capital, flow measures, “she said. “crypto assets and currencies can be used to evade those regulations.”

Goliath, who will take over as the first deputy managing director of IMF on January 21, also called on Prime Minister Narendra Modi Wednesday.

INDIA’S FISCAL & MONETARY POLICY

Goliath said fiscal support should be unwound gradually. On India’s monetary policy front, she said there was a need to keep a close watch on inflationary pressures, particularly core inflation, which is sticky at 6%, the upper band of the inflation target range of 2-6%.

GLOBAL RECOVERY

On global recovery, she said that though the recovery is continuing, the momentum has certainly weakened as the pandemic remains a big risk and new waves lead to supply chain disruptions.

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