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The International Monetary Fund has warned that the cost to countries of using Bitcoin as a currency could be huge

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Turning any cryptocurrency into a national currency is an "undesirable shortcut" to more inclusive financial services, two IMF officials said.

In BlockBeats news, on July 27th, the International Monetary Fund warned that the consequences of countries adopting Bitcoin as their national currency "could be dire".

According to Tobias Adrian, financial adviser and director of the Imf's Markets department, and Rhoda Weeks-Brown, general counsel and director of the IMF's Legal department, Cryptocurrencies such as Bitcoin (BTC) could catch on in countries with volatile inflation and exchange rates, providing a means of payment for the unbanked. However, the cost to an economy can be huge.

Countries that adopt cryptocurrencies as national currencies or "grant cryptoassets legal tender status" could see their domestic prices become highly volatile and assets used for anti-money laundering and counter-terrorism financing measures, in addition to macroeconomic stability and environmental concerns, the two officials said.

"If goods and services are priced in both real money and crypto assets, households and businesses will spend a lot of time and resources choosing which currency to hold rather than engaging in productive activity," said Adrian and Weeks-Brown. "If taxes are quoted in advance in the form of crypto assets and expenditures remain largely in local currency, government revenues are exposed to currency risk and vice versa."

They also claim that monetary policy in general "will lose influence," meaning that widespread adoption of cryptocurrencies weakens the credibility of any country that adopts assets such as Bitcoin or other tokens, and point to "large fluctuations in cryptocurrency asset prices." The price of bitcoin has fluctuated between about $65,000 and $30,000 this year, before falling to $37,000.

While the IMF blog does not specifically mention El Salvador, which will begin accepting Bitcoin as legal tender in September, Adrian and Weeks-Brown say that turning any cryptocurrency into a national currency is an "undesirable shortcut" to more inclusive financial services.