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According to the IMF, there is a strengthening relationship between Asian stock markets and cryptocurrency.

According to the IMF, there is a strengthening relationship between Asian stock markets and cryptocurrency.

The economic and cryptocurrency markets were remarkably divided prior to the COVID-19 pandemic in Asia. The International Monetary Fund has noted that the separation between the two has shrunk in recent years, necessitating greater regulatory oversight (IMF).

Financial experts at the IMF sound the alarm over rising crypto-equity correlation in the region.

The International Monetary Fund’s economists voiced their concerns about the nuances of the Asian markets in a blog post published on August 21. They think there will be significant development in the use of cryptocurrencies across the financial sector. They worry about threats to financial stability in the respective scenario. They continued by saying that it may not be so in the future with the boom-bust cycles, despite the fact that the financial sector currently appears to have some protection from such severe movements.

They also noted that institutional or private investors who held both traditional and digital currencies would be affected by the spread. Economists revealed a specific market instance in India, where return correlations between the Indian stock and Bitcoin (BTC) markets have increased by a factor of ten since the outbreak.

Increased stock market acknowledgement of crypto-related investment vehicles and venues may be a driving factor in the growing ties between traditional finance and the cryptocurrency market. The second is the growth in interest in cryptocurrency investments from institutional and individual Asian investors.

Experts have used the spillover methodology developed in the Global Financial Stability Note and found that there has been a significant increase in volatility spillovers in the case of cryptocurrencies and equities in India, Thailand, and Vietnam. Before wrapping up, the experts’ attention shifted to the Asian region’s regulatory bodies.

They recommended that they write out detailed and specific guidelines for dealing with the regulated financial institutions. Next, they advised regulators to organize their efforts across jurisdictions and provide information to and protect retail investors.

Tobias Adrian, of the International Monetary Fund, Suggests a Worldwide Plan to Protect Cryptocurrency Investors.

Tobias Adrian, general manager of financial markets at the International Monetary Fund, warned on July 27 that more algorithmic stablecoin failures might be seen in the future. In this regard, he advocated for a more global approach to regulation in order to better protect investors.

Orizu Augustine
Orizu Augustine is an experienced crypto writer working for Alltechcraft. Having passion for writing, he covers news articles from blockchain to cryptocurrency and iPhone and Samsung related articles.