Gita Gopinath, deputy managing director of the International Monetary Fund (IMF), has indicated that crypto assets are dangerous, and she has stayed away from them.
“I have entirely avoided it [crypto],” Gopinath remarked in an interview at the World Economic Forum’s Annual Meeting in Davos. “But that’s just me and my fear of taking risks.”
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The IMF official also noted the recent decline in the “speculative” asset class, emphasizing that it is not a market with “easy returns.” “In approximately six months, it went from around a $3 trillion market to about a $1.5 trillion market — very fast movements,” she said. It is not a high-yielding investment. As a result, you’re taking enormous risks.”
However, Gopinath believes that any dangerous asset class, such as cryptocurrency, should be regulated.
Volatility isn’t enough to keep crypto out.
At the Summit, IMF managing director Kristalina Georgieva reportedly stated that investors must make informed decisions as the Terra-led slump continues to hound the market. “The less backing there is, the more you should be willing to incur the danger of this thing blowing up in your face,” she said.
Following the de-peg of the Terra UST stablecoin, administrators and officials have called for rapid regulation of crypto assets. On CoinGecko, the worldwide cryptocurrency market cap was close to $1.3 trillion.
However, Georgieva maintains that not all virtual assets offer the same hazards and cannot be completely avoided. “It promises us all speedier service, far cheaper prices, and more inclusion,” the head of the international banking organization said, “but only if we sort apples from oranges and bananas.”
Despite being dubbed a coin, Georgieva does not believe Bitcoin can replace money since “it is not a reliable store of value.”
Especially since BTC’s comeback was very temporary. In the previous 24 hours, Bitcoin has fallen 3% below the important psychological milestone of $30,000.
“Citizens have lost trust in crypto,” stated François Villeroy de Galhau, a governor of the French Central Bank, citing the volatility. “Cryptocurrencies are not a dependable way of payment,” Galhau told CNN. Someone must be in charge of the value, and it must be universally recognized as a medium of exchange. It’s not,”
Despite the liquidity outflow, bitcoin supporters are showing up in force at the World Economic Forum this year. A free bitcoin pizza stand and a “Liquidity Lounge” were said to have adorned the Summit’s early days.
What is cryptography’s true purpose, then?
Thailand has been experimenting with digital currencies, according to Sethaput Suthiwartnarueput, a governor at the Bank of Thailand. “(It) has to be clear what problem you want to solve,” he stated.
“We don’t want to see it as a payment method,” Suthiwartnarueput said, adding that cryptocurrency is more of an investment for instrument rather than a means of exchange.
According to Villeroy, El Salvador’s experiment with bitcoin as a legal tender demonstrates how dangerous it might be to accept cryptocurrencies.
“I would prefer that El Salvador citizens have access to the euro,” he joked.
However, Georgieva pointed out that digital money might serve as a “global public good” by allowing people to send money across borders. The key is interoperability so that digital currencies may be transferred as easily as traditional currencies such as the dollar and euro.
Digital currencies will take time to mature and become more popular for consumers, major financial institutions, and governments, according to panelists. US lawmakers and the Federal Reserve are also debating the benefits and drawbacks of digitally-backed currencies.
“There is no silver bullet,” Credit Suisse Chairman Axel Lehmann remarked.