Kristalina Georgieva, the Managing Director of the IMF, or International Monetary Fund, discussed some topics essential to the future of the metaverse and digital currencies. She embraced the use of CBDCs, or Central Bank Digital Currencies, and asset-backed stable coins.
When asked to comment on digital currencies in the wake of the Terra/Luna algorithmic “stablecoin” crash that precipitated the broader crypto market crash, the director made sure to separate digital currencies into 3 groups, which she went on to give her position on each group:
- Central Bank Digital Currencies
- Asset-backed Stablecoins
- Non-backed coins
Presumably responding to the Terra/Luna crash that occurred a few weeks prior to her comments, she stated:
When somebody promises you 20% return on something that is not backed by any assets how would we normally call this thing? We would call it a pyramid. In other words this is pyramid in the digital age, but we should not be mistaken to immediately classify everything in the digital world in a negative way because there are three categories. The first one is Central Bank Digital Currencies, they are backed by the state and they offer finality when transactions are settled.
On the topic of CBDCs, she remarked “90% of central banks are exploring CBDCs” and “[digital currencies are] moving so fast the International Monetary Fund has to embrace it.” before going on to discuss some of the CBDC pilot projects that are already underway “China has a pilot with 128 million participants”. From Kristina’s perspective, it seems clear that with countries already implementing pilot projects, there should be some level of global coordination through a body such as the IMF.
Next on her list, the director addressed stablecoins specifically, saying “Stable coins backed by assets are OK. They look a lot like money market funds, but funds in this digital space”.
Last on the list were what she termed non-backed coins and spoke some words of empathy and caution for those investing in these risky coins: “I want to be very direct that I do feel for the people that lost money because part of the reason they lost money is not being educated in this new investment world.”
The director made some intriguing comments on bitcoin itself, saying:
Bitcoin may be called coin but it is not money. Why? Because a prerequisite for something to be money is to be a stable store of value so you can actually plan around it.
Ending on a positive note and encouraging her colleagues not to throw in the towel after the recent digital currency panic, she states:
I would beg you not to pull out of the importance of this world because of what Julia said. It offers us all faster service, much lower cost, and more inclusion, but only if we separate apples from oranges and bananas
Watch this video to see Director Georgieva’s comments: