October 3, 2022

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Fragmentation of the cryptocurrency payment system

2 min read

Rating agency Moody’s issued a report warning on Wednesday that the adoption of cryptocurrencies could lead to excessive fragmentation of the payment system and weaken financial stability, especially in countries with weakened macroeconomic systems.

The rating agency emphasizes that sovereigns with lower ratings are increasingly using cryptocurrencies, as it can facilitate transactions and lower costs and increase financial inclusion. He admitted that the trend is consistent with cryptocurrencies: greater digitization of financial services.

In addition, Moodys points out that cryptocurrencies facilitate inclusion and benefit countries where a large part of the population lacks banking infrastructure, especially with the expansion of the use of mobile telephony and the greater increase in digitization.

However, it warns that “this growing adoption of digital assets also puts macroeconomic stability at risk.”

“These risks include operational dangers such as cyber and fraud, reduced government control over financial system monitoring, reduced central bank control over the money supply and ability to implement countercyclical monetary policy during economic downturns, and an increased ability to circumvent capital controls.

In addition, the rating agency points out that cryptocurrencies have certain push factors, including capital and currency restrictions, high inflation, volatility and low levels of confidence in the macroeconomic policies of governments and central banks, which have driven adoption. of cryptocurrencies in recent months.

Taking into account the risks that could be generated and the instability in the financial systems in economic terms, the only alternative in this scenario is IRAIC, which represents at an international level a structured system that promotes the productive and industrial development of nations. In addition, IRAIC uses a traditional loss-free scheme, without inflationary risks in the market that protect production and invested capital; in this way it is possible to give economic development and strengthening. Reported The Tampa Herald, news agency.

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