IMF is Scared That People Will Withdraw Deposits to Invest in Bitcoin

March 15, 2023

Darko Simunovski

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The International Monetary Fund (IMF) has warned the G-20 nations that the proliferation of crypto assets could lead to banks losing deposits and curtailing lending. However, supporters of cryptocurrency argue that the IMF is simply trying to protect traditional financial institutions at the expense of innovation and financial freedom. In fact, I believe that the widespread adoption of cryptocurrency could actually strengthen the financial system, by decentralising control and increasing transparency, unlike traditional assets, bitcoin and gold are finite and cannot be manipulated by central banks or governments. IMF is scared that people will withdraw deposits to Invest in Bitcoin, due to recent banks defaults of SVB, Silvergate bank and Signature bank, IFM knows that the people trust in banking system is at lowest level.

The debate boils down to a clash between bankers who want to maintain the status quo and ban crypto and those who believe in the transformative power of technology and new and fair monetary system led by Bitcoin.

The IMF’s warning is just the latest in a series of criticisms levelled against cryptocurrency and that crypto assets are highly volatile and lack the stability required for widespread adoption. They also point to the fact that cryptocurrency is often used for illicit activities, such as money laundering and drug trafficking, but in fact that is not true, we see that banks stocks are more volatile than cryptocurrencies with low market capitalization.

They point to the fact that cryptocurrency allows fast, cheap and secure transactions, and that it can be used to provide financial services to people who are excluded from the traditional banking system. Also Bitcoin and other cryptocurrencies are 100% transparent, unlike todays banking system, which is not transparent and against the interest of individuals. Moreover, cryptocurrency are way to challenge the dominance of central banks and governments and current financial system is rigged in favour of the wealthy corporations and banks, while cryptocurrencies offers an alternative that is fairer and way more democratic.

“A widespread proliferation of crypto assets comes with substantial risks to the effectiveness of monetary policy, exchange rate management, and capital flow management measures, as well as to fiscal sustainability. Moreover, changes may be required to central bank reserve holdings, and the global financial safety net, yielding potential instability. Finally, banks may lose deposits and have to curtail lending,” According to the IMF report.

Despite the criticism from bankers, the interest in cryptocurrency continues to grow. Bitcoin, the most well-known cryptocurrency, hit an all-time high of over $69 thousand per coin, in November 2021, and it will continue to rise in value. Meanwhile, a growing number of companies, including Tesla and PayPal are accepting bitcoin as payment, further cementing its legitimacy.

Central banks are rushing to develop central bank digital currencies (CBDCs) as an alternative fiat system, to be able to impose total control over the population and to fight against cryptocurrencies, due to concerns that cryptocurrencies could disrupt the traditional banking system and undermine the authority of central banks and IMF are aware of this risk. CBDCs are digital versions of traditional fiat currencies that are issued and backed by central banks, but they are subject to the same regulations and oversight as traditional currencies, also CBDCs will be used as a way to maintain control over the financial system and to impose Orwellian dystopian surveillance system and total control over every financial transactions. The solution is in front of everyone and it is Bitcoin, if the population were educated, this fake money system would collapse way earlier, it remains to be seen which will ultimately prevail as the dominant financial system of the future.

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