To reduce the risk that additional easing may have the unintended consequence of leading to a further buildup of financial system vulnerabilities, macroprudential policies should be tightened, as warranted.

The IMF is suddenly very interested in prudence, and the management of systemic risk, encouraging the use of prescribed tools for mitigating dismal effects of prolonged negative interest, QE and easy credit, and the resultant movement of investors into riskier, more illiquid assets. The report maintains that “Low interest rates have reduced debt service costs and may have contributed to an increase in sovereign debt. This has made some governments more susceptible to a sudden and sharp tightening in financial conditions.”

Global Crisis Looms as IMF Report Cites Its Own Policy as Dangerous
Source: IMF

Just three years ago, however, in a 2016 blog post, the group was praising these very same practices, noting that “Although the experience with negative nominal interest rates is limited, we tentatively conclude that overall, they help deliver additional monetary stimulus. Wholesale interest rates have fallen as have some bank lending rates, which should help support demand and price stability.” The post further warns of the very same risks the new report cites, such as institutional entry into risky assets, but still concludes that such policies are helpful overall.

Global Crisis Looms as IMF Report Cites Its Own Policy as Dangerous

Greater Risk Now Condemned

IMF, 2016: “Banks benefit overall from [negative interest] policies that support price stability and growth…” even though “There may also be excessive risk-taking. As banks’ margins are squeezed, they may start lending to riskier borrowers to maintain their profit levels.”

IMF, 2019: “The monetary policy cycle may have reached a turning point in major advanced economies … Persistently low and declining yields on fixed-income instruments have continued to drive institutional investors … to boost returns by using leverage and investing in riskier and less liquid assets.” The report concludes that “Policymakers can help mitigate the buildup of vulnerabilities through appropriate incentives, minimum solvency or liquidity standards, and enhanced disclosures.”

In other words, they warned everyone of their risky, economically unsound plan, encouraged its implementation and adoption, and now are encouraging everyone to pull back quickly.

Global Economic Outlook Unstable

The executive summary of the report states:

Accommodative monetary policy is supporting the economy in the near term, but easy financial conditions are encouraging financial risk-taking and are fueling a further buildup of vulnerabilities in some sectors and countries.

The “some” here may be the understatement of the year. As news.Bitcoin.com has reported extensively, the current global situation is deteriorating rapidly with reckless capital injections, rampant negative interest rate policy implementation, negative yielding debt and once mega-powerful economies beginning to fail. In this sense, the IMF’s report is a mere statement of the obvious for many who are paying attention to the situation. Combined with the continued crackdown on free trade of proposed sound money alternatives like bitcoin, and it’s hard not to wax at least a little bit paranoid. Who knows, perhaps tomorrow the International Monetary fund will be pushing further for the creation of central bank digital currencies (CBDC) as the palliative for all the economic pain they’ve promoted and effected over the years.

What are your thoughts on the IMF’s new report? Let us know in the comments section below.


Image credits: Shutterstock, fair use.


Did you know you can buy and sell BCH privately using our noncustodial, peer-to-peer Local Bitcoin Cash trading platform? The Local.Bitcoin.com marketplace has thousands of participants from all around the world trading BCH right now. And if you need a bitcoin wallet to securely store your coins, you can download one from us here.

About the author

E-Crypto News was developed to assist all cryptocurrency investors in developing profitable cryptocurrency portfolios through the provision of timely and much-needed information. Investments in cryptocurrency require a level of detail, sensitivity, and accuracy that isn’t required in any other market and as such, we’ve developed our databases to help fill in information gaps.

Related Posts

E-Crypto News Executive Interviews

Crypto Scams

Cryptosoft
Cryptosoft Trading Bot Review
June 27, 2022
The Largest Crypto Scams Of 2022 (So Far)
The Largest Crypto Scams Of 2022 (So Far)
June 14, 2022
Scammers
How Do Scammers Entice Their Prey?
May 10, 2022
Beanstalk Farms Loses $80M In A Massive DeFi Governance Flash-Loan Hack
Beanstalk Farms Loses $80M In A Massive DeFi Governance Flash-Loan Hack
April 23, 2022
Prove
Joon Pak Head of Crypto at Prove talks to Us about Crypto Fraud And More
April 11, 2022

Automated trading with HaasBot Crypto Trading Bots

Blockchain/Cryptocurrency Questions and Answers

Russia
Roundtable Interview-What is the Effect of The Russia-Ukraine War on Cryptocurrency Prices?
March 4, 2022
GamStop
How Does Bitcoin Casino Work + 2021 Beginner’s Guide
November 8, 2021
Cryptocurrency
How to Buy and Sell Cryptocurrency
November 8, 2021
What Are Bitcoin Futures And How Will They Work In 2022?
November 4, 2021
Ethereum
The Unconventional Guide to Ethereum
October 28, 2021


CryptoCurrencyUSDChange 1hChange 24hChange 7d
Bitcoin21,171 1.18 % 1.41 % 2.59 %
Ethereum1,227.6 1.61 % 0.43 % 8.44 %
Tether0.9998 0.03 % 0.16 % 0.01 %
USD Coin1.002 0.11 % 0.00 % 0.12 %
BNB239.73 0.78 % 0.27 % 10.37 %
Binance USD1.004 0.15 % 0.28 % 0.03 %
XRP0.3520 0.46 % 3.57 % 8.62 %
Cardano0.4931 0.90 % 2.49 % 0.07 %
Solana39.14 1.20 % 4.40 % 10.34 %
Dogecoin0.07255 1.29 % 7.08 % 20.41 %

bitcoin
Bitcoin (BTC) $ 21,117.00
ethereum
Ethereum (ETH) $ 1,225.17
tether
Tether (USDT) $ 1.00
usd-coin
USD Coin (USDC) $ 1.00
bnb
BNB (BNB) $ 240.08
binance-usd
Binance USD (BUSD) $ 1.01
xrp
XRP (XRP) $ 0.353801
cardano
Cardano (ADA) $ 0.493814
solana
Solana (SOL) $ 39.20
dogecoin
Dogecoin (DOGE) $ 0.072816