IMF Wants to Create Framework to Assess Crypto-related Risks

A recently released paper by the International Monetary Fund (IMF) suggests a comprehensive framework for understanding and monitoring systemic risks associated with crypto assets.

The framework provides tools for policymakers and regulatory authorities to mitigate potential risks stemming from the crypto sector.

Dubbed “Assessing Macrofinancial Risks from Crypto Assets,” the IMF paper stresses the significance of incorporating these tools into existing regulatory and risk assessment processes.

According to the paper, the goal is to outline the various avenues through which crypto assets could amplify any instability in the crypto world and lead to systemic risk.

To achieve this, the paper proposes a crypto risk assessment matrix (C-RAM) that evaluates global risks. “The global C-RAM identifies risks that are external to countries and have macro-financial stability implications,” the paper states.

Besides assessing global risks, the framework also assists in identifying areas of prudential risk specific to each country.

“The country-level analysis evaluates vulnerabilities and risks, identifies possible triggers for systemic risk, and suggests potential policy instruments,” the paper explains.

The framework comprises of three steps. The first step involves a decision tree that determines the level of criticality of the crypto sector to a nation’s economy.