coinculture.com
A senior official at the International Monetary Fund (IMF) has warned that financial sanctions placed on Russia, including limits on the country’s central bank, could have far-reaching consequences for the world’s currencies as the Russian invasion of Ukraine enters its second month.
Gita Gopinath, the IMF’s first deputy managing director, says that some nations have begun “renegotiating the currency in which they get paid for trade,” according to a Financial Times interview cited by Insider on March 31.
“The dollar would remain the major global currency even in that landscape,” she explained, “but fragmentation at a smaller level is certainly possible.”
According to Gopinath, the current situation may encourage the global adoption of currencies other than the US dollar, such as stablecoins and central bank digital currencies (CBDCs).
She also warned of the lack of regulation surrounding cryptocurrencies and the need to address this issue before their widespread adoption: “All of these will get even greater attention following the recent episodes, which draws us to the question of international regulation. There is a gap to be filled there,” she said.
Why people are turning to crypto during wartime
On February 24, the day Russian forces entered Ukraine in a “special military operation,” the cryptocurrency market reacted with an immediate sell-off, resulting in losses of more than $500 million.
With more than 90% of Bitcoin (BTC) in circulation, its inflation rate fell to 1.7 percent in March, five times lower than the US dollar, making BTC a viable inflation hedge for investors.
As a result, the market has made a remarkable recovery, with the price of Bitcoin, its flagship asset, going up by as much as 35% since the invasion began. This growth has pushed the market’s capitalization up as well, which now stands at $2.12 trillion.
It’s worth noting that cryptocurrencies have proven useful in obtaining aid for the invaded people and their military. According to Finbold, cryptocurrency donations recently reached $100 million.