The International Monetary Fund (IMF) joins the World Bank as it also cuts the global growth forecast for next year and next in the shadow of the war in Ukraine. At the same time, the fund also warns against risking the global financial system due to the growing popularity of crypto – which has risen in Corona in general, but even more so since the beginning of the war.
“The consequences of the Russian invasion of Ukraine, including sanctions, are in my hands all over the world and will continue to test the stability of the financial system in several channels, including accelerating the adoption of crypto in emerging markets, as well as direct and indirect exposure of banks and other economic entities.” It is written in a report published by the fund.
On the one hand, the Ukrainians themselves have raised donations using various cryptocurrencies, but at the same time there is also the fear that Russian entities on which sanctions have been imposed will use cryptocurrencies to circumvent them. It has also been recommended that a global task force be set up to prevent money laundering through crypto.
The IMF is aware that currency trading is also done by investors, who are waiting for an increase in value or looking to sell on, and not necessarily to pay with the cryptocurrencies. And yet, they warn that the more they use cryptocurrencies as a means of payment (e.g., as El Salvador tries to promote without much success with the
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) This will challenge world policymakers.
The fund calls on these to formulate with their global standard counterparts around the crypto industry, and to tighten supervision of fintech companies and De-Fi lending ventures (short for Decentralized Financing, loans that do not rely on decentralized currency, ie currency of any central bank).
The fund also warns that the crypto-currency mining activity carried out in the sanctioned Russia territory could be used to accumulate reserves. According to the report, the average monthly revenue of total bitcoin mining in the world last year was $ 1.4 billion, and Russian miners have an 11% share of this market.
And well for the updated growth forecasts, the fund now expects the world economy to grow by 3.6% this year (4.4% in the previous forecast in January) and next year also by 3.6% (3.8% in the previous forecast). According to the forecast, the recovery of the economy will slow significantly this year in the shadow of the war. Forecasts have been lowered not only in Eastern Europe but also outside it, due to the fact that the effects do not stop at the borders – and there are disruptions in the world’s commodity markets.
Russia’s economy is set to contract by 8.5% this year (up from 2.8% in the previous forecast). The United States is expected to grow by 3.7% this year (4% in the previous forecast), although exposure to Russia is limited, weighted in the outlook for the rate hike there are expected to hurt growth to suppress inflation. Due to the zero sticking policy in Corona in China, the forecast for its growth has also been diminished, with the IMF now forecast growth of 4.4% this year (4.8% in the previous forecast).
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