IMF Proposes Framework to Assess Crypto Asset Risks

blockchain.news:

A recent working paper by the International Monetary Fund (IMF) titled «Assessing Macrofinancial Risks from Crypto Assets» has shed light on the complexities and potential risks in the rapidly growing crypto sector. The paper serves as a comprehensive guide for understanding the various risks associated with crypto assets, particularly the systemic risks that could affect global financial stability.

Proposed Framework: The C-RAM

Central to the paper is the proposal of a Crypto Risk Assessment Matrix (C-RAM) aimed at assessing global risks. According to the paper, this matrix identifies global risks exogenous to countries that have implications for macro-financial stability. The C-RAM serves dual purposes: first, to assist policymakers and regulators in containing potential risks from the crypto sector, and second, to serve as a tool for identifying areas of prudential risk within jurisdictions.

Three-Step Approach

The proposed framework utilizes a three-step approach. The first step involves a decision tree to assess how critically important the crypto sector is to a national economy. The second step examines indicators similar to those used in traditional finance but specifically designed to indicate the potential for systemic risk in the crypto sector. The third step focuses on assessing the global macro-financial risk from crypto assets, providing insights into a country's systemic risk assessment.

Rapid Expansion and Integration

According to the paper, crypto assets have become an important component of the international financial sector. They offer various advantages, such as more efficient payment systems, faster cross-border transactions, and increased financial inclusion. However, the paper also warns of