IMF calls for ‘brakes’ in markets that never sleep to avoid deep crises

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Briefings

The IMF warns that tokenized asset trading mechanisms, such as continuous negotiation and instant liquidation, may accelerate forced sales during market stress, potentially transmitting risks to traditional markets. This warning appears in the October 'Global Financial Stability' report, which notes that while tokenization does not fundamentally change risk nature, it can reshape vulnerability accumulation channels. The report cites a July market valuation of approximately $65 billion for tokenized assets, excluding reporting operations and private markets. Key uncertainty remains regarding whether these mechanisms are sufficient for all asset types and whether the observed volatility differences between tokenized and traditional markets are statistically significant or due to sampling bias.

Key points

The IMF's October 'Global Financial Stability' report warns that continuous asset negotiation and instant liquidation mechanisms may accelerate forced sales during market stress, potentially transmitting risks to traditional markets.

Tokenized assets in July were valued at approximately $65 billion, excluding reporting operations and private markets, though the sample represents only about 15% of the total market.

Context and limitations

The report's findings on volatility differences between tokenized and traditional markets are based on a limited sample of five US assets, which may not represent the full market. The study also excludes night and weekend trading periods, potentially affecting the accuracy of volatility comparisons. The IMF explicitly states that risks remain limited for now, but the long-term impact of these mechanisms on systemic stability is not fully quantified.

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