IMF director Kristalina Georgieva emphasizes that a ban on cryptocurrencies should not be ruled out entirely if these digital assets pose an increasing risk to the stability of the financial sector.
Regulating crypto is top priority of IMF
“We are very much in favor of regulating the world of digital money,” Georgieva said in an interview with Bloomberg, adding that this is a top priority for the Financial Stability Board (FSB), the IMF and the Bank for International Settlements.
Banning crypto is one option
If regulation is slow to get going and crypto poses an increasing risk to consumers and possibly financial stability, the option to ban cryptocurrencies should still be on the table, Georgieva said. She referred to countries such as India, which have explored this option in the past.
With more predictability and consumer protection in place, these measures may no longer be necessary, but as the IMF director has emphasized, “we are not yet in such a world”. Last year, the IMF stated in a report that regulation of cryptocurrencies should not be designed to hinder innovation, but to build trust.
Cryptocurrencies are not money
In addition to her previous comments, Georgieva noted that there is still a lot of ambiguity about digital currencies, and that the main goal of the IMF is to differentiate between state-backed central bank digital currencies (CBDCs) and publicly issued cryptocurrencies and stablecoins.
Georgieva argues that state-backed stablecoins (CBDCs) offer “reliability,” while unbacked cryptocurrencies are speculative, high-risk investments and cannot be considered money.
At the recent G-20 meeting in India, the organization’s finance ministers and central bank governors released a document recommending setting global regulatory standards for the industry, including those for stablecoins. Referring to this document, Georgieva emphasized that crypto assets cannot be considered legal tender as they do not meet the definition of money.
