The IMF's stance is a sign of the growing acceptance of digital currencies, which have become increasingly popular in recent years. The report highlights the need for governments to develop a regulatory framework that will protect investors and ensure the integrity of the financial system. It also emphasizes the importance of monitoring the use of cryptocurrencies to prevent money laundering and other criminal activities.
At the G20 summit in India, International Monetary Fund (IMF) Managing Director Kristalina Georgieva declared that the agency would rather regulate cryptocurrencies than impose a complete ban.
The International Monetary Fund (IMF) has expressed a preference for differentiating and regulating crypto assets, rather than enforcing an outright ban - though the latter remains an option for now.
Speaking on the sidelines of the G20 finance ministers meetings in Bengaluru, India, IMF Managing Director Kristalina Georgieva highlighted the agency's view on digital assets and its desired approach to regulation.
“We are very much in favour of regulating the world of digital money,” she declared, emphasizing that this is a top priority.
In an interview with Bloomberg published on Feb. 27, Georgieva responded to a question on her recent comments about a potential complete ban on cryptocurrencies. She clarified that there is still much confusion surrounding the classification of digital money.
“Our initial goal is to distinguish between state-backed digital currencies issued by central banks and openly traded crypto assets and stablecoins.”
Fully-backed stablecoins provide a “promising environment for the economy,” while non-backed crypto assets are highly speculative, risky, and not considered money, according to her.
Citing a recent paper recommending global regulation standards, Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), asserted that cryptocurrencies cannot be considered legal tender due to their lack of backing.
However, she warned that the option to ban them should not be taken off the table if they begin to pose a greater risk to financial stability. Georgieva argued that good regulations, predictability, and consumer protection would be a better option than banning and that an inability to protect consumers from the rapidly evolving world of crypto assets would be the primary catalyst for such a decision.
In response to this, the IMF, the Financial Stability Board, and the Bank for International Settlements (BIS) are collaborating to create a regulatory framework to be released in the second half of 2021.
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