IMF warns crypto assets create ‘new vulnerabilities’ in financial system
The International Monetary Fund has warned that the growth in cryptocurrencies such as bitcoin create new vulnerabilities in the international financial system.
In its annual World Economic Outlook the global financial and trade body issued concerns over the growth of the cryptocurrency sector – particularly with reference to the security of digital assets.
While malpractice and poorly-monitored trading by the main financial services groups remain the biggest threat to financial stability, the IMF says cybersecurity breaches and cyber attacks on critical financial infrastructure represent an additional source of risk.
Such attacks on financial technology networks are dangerous because they could undermine cross-border payment systems and disrupt the flow of goods and services, the IMF report adds.
“Continued rapid growth of crypto assets could create new vulnerabilities in the international financial system,” the report goes on to say.
While many regulatory and monetary authorities – including the Bank of England – have hitherto regarded the cryptocurrency sector too small to be of significance in terms of global financial stability, the IMF’s main concern is not about the size of the sector, but the technological advances in cybercrime.
Financial Stability Report
The IMF said in its Global Financial Stability Report last week that new financial technology poses challenges as well as opportunities and that cybersecurity risks needed to be addressed.
The report said: “Given the increasing reliance of the financial sector on information technology and the interconnectedness of systems, cyber threats could pose financial stability risk.
“The direct cost of cybersecurity events could be large, and indirect costs, such as reputational risk, further raise the stakes.”