The International Monetary Fund has laid out a nine-point action plan for how countries should treat crypto assets, with point number one a plea not to give cryptocurrencies such as bitcoin legal tender status.

The global lender of last resort said its Executive Board had discussed a paper, “Elements of Effective Policies for Crypto Assets,” that provided “guidance to IMF member countries on key elements of an appropriate policy response to crypto assets.” Such efforts have become a priority for authorities, the fund said, after the collapse of a number of crypto exchanges and assets over the last couple of years, adding that doing nothing was now “untenable”. The top recommendation was to “safeguard monetary sovereignty and stability by strengthening monetary policy frameworks and do not grant crypto assets official currency or legal tender status.”

The IMF had hit out at El Salvador in late 2021 when the central American country became the first to adopt bitcoin as legal tender, a move that has since been copied by Central African Republic.

Other advice on Thursday’s list, which comes as G20 decision makers meet in India, included guarding against excessive capital flows, adopting unambiguous tax rules and laws around crypto assets, and developing and enforcing oversight requirements for all crypto market actors.

Countries should also establish international arrangements to enhance supervision and enforce regulations, the IMF added, as well as set up ways to monitor crypto’s impact on the stability of the global monetary system.

Outlining its Executive Board’s assessment, the IMF said directors welcomed the proposals and agreed the widespread adoption of crypto assets “could undermine the effectiveness of monetary policy, circumvent capital flow management measures, and exacerbate fiscal risks.”

They “generally agreed,” too, that crypto assets should not be granted official currency or legal tender status, and though strict bans of assets are “not the first-best option,” a few directors thought they should not be ruled out.

India remains global growth engine, uniquely poised to lead G20: IMF

Ahead of the meeting of G20 finance ministers and central bank governors in Bengaluru, the International Monetary Fund (IMF) reiterated that India’s strong performance remains a “bright spot” in an uncertain global economy, said that the country will contribute 15% to global growth, and added that it is “uniquely positioned to bring countries together”. In a policy blog titled “Policy Priorities for G20: One Earth, One Family, One Future”, taking up from India’s theme for its presidency, IMF managing director Kristalina Georgieva noted that, in Bengaluru, the World Bank, IMF and India’s G20 presidency are convening a new Global Sovereign Debt Roundtable for its first in-person meeting. Describing India as a “global growth engine”, she hailed the country’s unified payment interface as an excellent example of “technology boosting financial inclusion”, and said India’s assessment of central bank digital currencies (CBDCs) can inform studies elsewhere.

She noted that while 2023 will be a challenging year, it could be a turning point with inflation declining and growth bottoming out. Alluding to IMF’s latest projections which suggest that global growth will slow to 2.9% this year and then rebound to 3.1% in 2024, she noted, “Look behind the headline numbers and we see emerging market and developing economies providing much of the momentum. We expect them to account for about four-fifths of global growth this year, with India alone expected to contribute more than 15%.”