International Monetary Fund's (IMF) Managing Director Kristalina Georgieva said in an interview with CNBC-TV18 on September 9 that her thoughts align with India's with regard to crypto regulations and that the pros and cons must be balanced.
She said: “India is right to call on the IMF for regulations so crypto does not become like the wild, wild west”, and added that the IMF will “dedicate a team to work on it to balance the pros and cons of cryptos”.
Elaborating further on the role that India can play when it takes on the G20 presidency, Kristalina Georgieva said: “I see three areas where we can work very productively:
“First, with strengthening the multilateral system. It is now being challenged; there are forces of fragmentation, which would prove damaging to the emerging markets in developing economies. Let’s remember that the emerging growth quadrupled its economy in the last three decades and 1.3 billion people have been lifted out of poverty largely because of international cooperation. So, there is a lot at stake and India will be speaking on behalf of emerging markets in the developing countries… we will be supporting that wholeheartedly.”
Secondly, the world is changing very rapidly, especially in the area of digital. It is as if it was put on steroids by the pandemic and in the world of money, crypto and stablecoin have emerged very strong. However, they are not regulated. So, India is right to call on the IMF to make sure that cryptos are regulated, the IMF MD said.
Adding, "For one, they must be differentiated across different asset classes – whether they are not backed like the bitcoin or backed like the stablecoin – which brings with it a separate set of risks such as dollarization -- if the United States wants stablecoin to dominate.”
Further, regulation must be in place to take advantage of what crypto can deliver – fast and cheap payment – but also manage the risks to cyber security and especially how many get on the darker side.
“Third, at a time when debt sustainability is becoming a growing concern, India being a new donor, a new lender, can play a very important role in advancing that work. A G20 common framework for debt resolution is already in place and it is very important to have a rule book that makes access to it and using it clear – possibly expanding it so that countries like Sri Lanka can find a home in the common framework," Georgieva added.
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