{"id":13266,"date":"2021-10-16T21:54:12","date_gmt":"2021-10-16T21:54:12","guid":{"rendered":"https:\/\/www.buyucoin.com\/crypto-labs\/economics-professor-warns-cryptocurrencies-may-contribute-to-monetary-and-financial-instability\/"},"modified":"2021-10-16T21:54:12","modified_gmt":"2021-10-16T21:54:12","slug":"economics-professor-warns-cryptocurrencies-may-contribute-to-monetary-and-financial-instability","status":"publish","type":"post","link":"https:\/\/www.buyucoin.com\/crypto-labs\/economics-professor-warns-cryptocurrencies-may-contribute-to-monetary-and-financial-instability\/","title":{"rendered":"Economics Professor Warns \u2018Cryptocurrencies May Contribute to Monetary and Financial Instability\u2019"},"content":{"rendered":"

Cornell University\u2019s professor of economics and former head of the IMF\u2019s China division, Eswar Prasad, has warned that \u201cCryptocurrencies may contribute to monetary and financial instability.\u201d He added that the risk is amplified if the industry is unregulated and lacks investor protection.<\/strong><\/p>\n

Economist Sees Crypto Posing Risks to Financial Stability<\/h2>\n

Eswar Prasad, the Nandlal P. Tolani Senior Professor of Trade Policy and professor of economics at the Charles H. Dyson School of Applied Economics and Management at Cornell University, shared his view on cryptocurrency in an interview with CNBC, published Wednesday.<\/p>\n

Prasad is also a senior fellow at the Brookings Institution, where he holds the New Century Chair in International Economics, and a research associate at the National Bureau of Economic Research. He was previously chief of the Financial Studies Division in the research department of the International Monetary Fund (IMF) and head of the IMF\u2019s China division.<\/p>\n

He said:<\/p>\n

Cryptocurrencies may contribute to monetary and financial instability, especially if they were to spawn a large and unregulated financial system that lacks investor protection.<\/p>\n

His statement echoes a report recently published by the IMF cautioning<\/a> that the rising popularity of cryptocurrency could pose a threat to financial stability. Moreover, the deputy governor of the Bank of England, Jon Cunliffe, said this week that regulation<\/a> is urgently needed since the crypto industry is growing rapidly, and there are some \u201cvery good reasons\u201d to think that it could pose risks to the country\u2019s financial stability in the future, even though the risks are currently limited<\/a>.<\/p>\n

Professor Prasad was also asked how cryptocurrencies could widen economic inequality. \u201cCryptocurrencies and their underlying technology hold out the promise of democratizing finance by making digital payments and other financial products and services easily accessible to the masses,\u201d he replied. \u201cBut because of existing inequalities in digital access and financial literacy, they could end up worsening inequality.\u201d<\/p>\n

In addition, he emphasized that \u201cany financial risks arising from investing in cryptocurrencies and related products might end up falling especially heavily on na\u00efve retail investors.\u201d<\/p>\n

The Cornell professor of economics also discussed central bank digital currencies (CBDCs), stating:<\/p>\n

I think central bank digital currencies are the way of the future. But every central bank will want to make sure that its money is not used for illicit purposes, so transactions will be auditable and traceable.<\/p>\n

However, Prasad noted that \u201cif every payment you make, including for a cup of coffee or for a sandwich, can be seen by a government agency, that\u2019s an uncomfortable proposition.\u201d The economist concluded: \u201cYou could, in a more dystopian world, have the government deciding what sort of goods and services its money can be used for.\u201d<\/p>\n

Do you agree with the economics professor? Let us know in the comments section below.<\/strong><\/em><\/p>\n

Bitcoin News
\nEconomics, Bank of England, Cornell University, Eswar Prasad, Eswar Prasad bitcoin, Eswar Prasad crypto, Eswar Prasad cryptocurrency, Financial Instability, financial stability, IMF<\/p>\n","protected":false},"excerpt":{"rendered":"

Cornell University\u2019s professor of economics and former head of the IMF\u2019s China division, Eswar Prasad, has warned that \u201cCryptocurrencies may contribute to monetary and financial instability.\u201d He added that the risk is amplified if the industry is unregulated and lacks investor protection. Economist Sees Crypto Posing Risks to Financial Stability Eswar Prasad, the Nandlal P.…<\/p>\n","protected":false},"author":0,"featured_media":13267,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[53,3],"tags":[],"class_list":["post-13266","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blockchain-news","category-coin-news"],"_links":{"self":[{"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/posts\/13266"}],"collection":[{"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/comments?post=13266"}],"version-history":[{"count":0,"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/posts\/13266\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/media\/13267"}],"wp:attachment":[{"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/media?parent=13266"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/categories?post=13266"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/tags?post=13266"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}