IMF Managing Director: “Cryptocurrency is more of an asset class than moneyâ€
Virtual currency is not money
In an interview with Yahoo Finance, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), expressed the view that “we should distinguish between currency and assets†regarding crypto assets (virtual currencies).
Georgieva pointed out that cryptocurrencies are an “asset class†and come with a variety of investment risks, including those that are backed or unbacked.
However, he argues that cryptocurrencies are “strictly speaking not money, but more like a money management fund (MMF).†He said that central bank digital currency (CBDC), which is a “digitized form of money,†is money.
He also cautioned that while it is true that the private sector has played a role in the history of money, great care must be taken when explaining cryptocurrencies to the general public.
I like the idea that payment systems can be strengthened through private sector participation, but we must be careful not to mislead citizens into thinking that cryptocurrencies are equivalent to all monetary examples.
Larry Fink, CEO of BlackRock, a major US asset management company, expressed a similar view to Georgieva.
Mr. Fink evaluates the Bitcoin spot ETF, which was approved on the 10th, as having the potential to increase the legitimacy and security of the virtual currency industry. He doesn’t seem to think it will work.
I don’t think (Bitcoin) will ever become a currency. I think of it as an asset class.
connection:IMF proposes risk assessment for virtual currencies that can become a “shadow financial systemâ€
Need for regulation
At the Digital Currency Conference held in Seoul, South Korea in December last year, Georgieva emphasized the importance of regulating virtual currencies, saying they could pose risks to financial stability.
He said increasing penetration of cryptocurrencies could undermine monetary policy transmission and circumvent capital flow control measures. He added that destabilizing tax collections could undermine fiscal sustainability.
Georgieva referred to a report jointly authored by the Financial Stability Board (FSB) and the IMF that provided guidance on cryptocurrency regulation and released in September last year. A key element of this, she said, is “not to make cryptocurrencies legal or official currency.â€
However, he emphasized that the rules outlined in this guidance are not aimed at returning to a pre-cryptocurrency world or crushing innovation. “Good rules can encourage and guide innovation,†he said.
connection:G20 Financial Stability Board and IMF to announce virtual currency regulatory roadmap
Proper infrastructure development
While Georgieva expresses concerns about the spread of virtual currencies, she highly values ​​the potential of blockchain technology.
He pointed to the “potential benefits†of tokenizing assets and conducting transactions through blockchain updates, citing a successful pilot by the Monetary Authority of Singapore (central bank).
Georgieva suggested that “safe money†is needed for reliable on-chain transactions, and that CBDCs can play that role. He also stated that a platform with high interoperability of assets and currencies is needed, and that compliance with international standards such as money laundering and prevention of terrorist financing, and consistency with each country’s policies are also important factors.
After all, money, like any other asset, is a financial contract, or IOU. Whether it’s solving cross-border payments or ensuring the efficiency and stability of asset transactions, the end result is the same.
connection:“Taiwan Central Bank Highlights Benefits of CBDC and Real Asset Tokenization (RWA)â€
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