IMF chief warns against confusing cryptocurrencies with currencies

IMF chief warns against confusing cryptocurrencies with currencies

IMF Chief Kristalina Georgieva warned against confusing cryptocurrencies with currencies and said anything not backed by a sovereign guarantee can be an asset class but not a currency, as she stated that Bitcoins can't be'money' because it has got 'Coin' in its name.

She said at the World Economic Forum Annual Meeting that digital currency products may be better at providing faster services at a lower cost and better inclusiveness, but there was a need to separate apples from bananas, and regulation would be a key factor in that.

At the same time, the Central Bank of France Governor Francois Villeroy de Galhau said the banknotes were a great technological advancement when they were introduced.

I always speak ofcryptocurrencies as assets and not as currencies. There is no one in case of so-called criptocurrencies, where someone has to take the responsibility. He said that currency needs to have a lot of trust and that they need to be universally acceptable.

We can't have currency on one side and trust on the other side. They need to be together, he said.

When asked about the loss of trust in central banks, he responded, My impression is that the people are losing trust in cryptocurrencies and that loss of trust in central banks is more important than that in central banks. He said that CBDCs would be modes of payments and not investment assets.

The governor said that there was a reason why the last word in CBDC was 'currency' and not 'coin'.

He said that the world would still rely on banknotes for the next century despite the advent of CBDCs.

The IMF chief appeared optimistic about the future of banknotes, along with digital money, and mentioned an example that when the Ukraine war started, there was a huge surge in demand for banknotes due to the fear of cyberattacks.

Experts believe that CBDCs could change the landscape of payments and banking with Central Bank Digital Currencies. More countries are experimenting with CBDCs and some are starting to bring them to market, potentially offering lessons for the rest of the world.

The panelists discussed the macroeconomic and geopolitical implications of the roll-out of CBDCs and how can the public and private sectors work together to ensure that CBDC development benefits consumers and minimizes financial stability.