The IMF has played down the impact of the crypto market crash on global financial stability but warned of more gloom and uncertainty ahead.
In its World Economic Outlook update for July, the International Monetary Fund said that 2022 has been “gloomy and more uncertain.”, published on July 26, noted that a “dramatic sell-off” of crypto assets led to large losses in crypto investment vehicles and hedge funds. However, “spillovers to the broader financial system have been limited so far.”
The report was referring to the collapse of the Terra ecosystem in May and the resultant runs on crypto lending and brokerage platforms Celsius, Voyager Digital, Three Arrows Capital, and BlockFi, among others.from their peak capitalization of $3 trillion in November 2021 to current levels of about $1 trillion. Last week’s brief rally appears to have dissipated as around $80 billion has left the space since the weekend.
It said the baseline forecast is for growth to slow from 6.1% last year to 3.2% in 2022. Some countries will see growth decline in 2022, sending them spiraling into recession. Reduced household purchasing power due to inflation and tighter monetary policies have exacerbated the problems.into 2023. “The risk of recession is particularly prominent in 2023 when in several economies growth is expected to bottom out.”This week, the U.S.
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