International Monetary Fund (IMF) has warned Nigeria and other countries on the danger of adopting crypto assets as a national currency.
The IMF warning followed plans by Nigeria to launch its own cryptocurrency.
The Central Bank of Nigeria had announced its readiness to make a government-backed digital currency available for Nigerians in a bid to stifle the influence of Bitcoin and other unregulated cryptos.
But in a post on its website on Monday, the Bretton Woods institution warned that the adoption of cryptocurrency would expose banks and other financial institutions to the volatility and fluctuations of the cryptocurrency market.
According to IMF, adoption of cryptocurrency as a national currency would weaken monetary policies and cause macroeconomic instability.
It listed other negative impacts of such move on the economy to include legal issues, highly unstable domestic prices, and a decline in financial integrity.
IMF said: “Some countries may be tempted by a shortcut: adopting cryptoassets as national currencies.
“Many are indeed secure, easy to access, and cheap to transact. We believe, however, that in most cases risks and costs outweigh potential benefits.
“Moreover, widespread crypto assets use would undermine consumer protection. Households and businesses could lose wealth through large swings in value, fraud, or cyber-attacks.”
It stressed that countries with stable inflation, exchange rates, and credible institutions would not record widespread adoption while cryptocurrency remains a vehicle to make money rather than store of value.Follow us on social media