The increasing use of cryptocurrencies and similar digital assets has never really garnered the support of the International Monetary Fund (IMF), and the financial institution’s stance has remained unchanged over the years. In a recent development, the IMF has warned Zimbabwe against launching a gold-backed digital asset to stabilize its economy against the faltering US dollar. The IMF fears that this digital asset could hamper the country’s existing economic system.
The IMF allegedly believes that Zimbabwe should consider “liberalizing its foreign exchange market” instead of adopting this new digital asset.
“A careful assessment should be conducted to ensure that the benefits of this action outweigh the costs and potential risks, including, for example, macroeconomic and financial stability risks, legal and operational risks, governance risks, and costs of foregone foreign exchange reserves,” an anonymous source told Bitcoin .com quoted the matter as saying.
According to its plans, the South African country wants to enable the exchange of small denominations of the Zimbabwean dollar into the digital gold token to protect its investments from market volatility.
The move aims to combat the inflationary situation in Zimbabwe with the help of this planned stablecoin.
Authorities at the IMF have reached out to Zimbabwe’s regulators, proposing to avoid mixing crypto-like digital assets in its financial system.
As an alternative proposal, the international lender has asked Zimbabwe to introduce tight monetary policies to protect its nationals from market turmoil.
To date, Zimbabwe has not responded to the IMF’s proposals or concerns.
However, this isn’t the first time the IMF has expressed its concerns about the growth of digital assets.
She previously criticized the Central American state of El Salvador for integrating Bitcoin into its traditional banking system, which relies on the US dollar. In September 2021, El Salvador became the first country in the world to legalize bitcoin as a payment option alongside its fiat currency, the US dollar.
Later in 2022, the IMF tricked debt-ridden Argentina into signing a deal “discouraging” the use of cryptocurrencies in exchange for financial aid.