IMF’s Georgieva defends cryptocurrency after crash for ‘faster service’ and ‘lower costs’
- Georgieva distinguished between stablecoins backed by assets like cash and those like TerraUSD, an algorithmic stablecoin that imploded earlier this month
- It is the responsibility of regulators across the globe to put up guardrails and offer education to protect investors, she said
People shouldn’t completely shun the crypto world after the recent collapse of a popular stablecoin, an official at the International Monetary Fund said Monday.
“I would beg you not to pull out of the importance of this world,” said Kristalina Georgieva, the IMF’s managing director, said at the World Economic Forum’s annual meeting in Davos. “It offers us all faster service, much lower costs, and more inclusion, but only if we separate apples from oranges and bananas,” she said, adding that it’s the responsibility of regulators across the globe to put up guardrails and offer education to protect investors.
Georgieva noted that there are many different types of assets with varying levels of associated risk. For instance, there’s a big difference between stablecoins that are backed by cash and other assets and those that rely on algorithms to maintain their value, like the Terra coin, she said. Stablecoins are a type of cryptocurrency that are supposed to maintain a 1-to-1 value to a reserve asset like the US dollar.
“The less there is backing it, the more you should be prepared to take the risk of this thing blowing up in your face,” Georgieva said. But she added that not all digital money should be tarnished with the same brush.