IMF MD Kristalina Georgieva Suggests People Not Abandon Crypto After Terra’s Brutal Crash

Georgieva made her statements at the ongoing World Economic Forum’s annual meeting in Davos, Switzerland.

By Radhika Parashar | Updated: 24 May 2022 16:01 IST

IMF MD Kristalina Georgieva Suggests People Not Abandon Crypto After Terra’s Brutal Crash

Photo Credit: Twitter/ Kristalina Georgieva

The IMF MD was speaking alongside governor at France’s Central Bank

Highlights

IMF official acknowledged crypto offers faster services
Georgieva was speaking in Davos about CBDCs
Investors pulled out some $141 million from crypto industry recently

The digital assets industry saw the year's second-largest outflow as investors pulled out some $141 million (roughly Rs. 1,109 crore) from the industry last week following Terra's recent crash. Kristalina Georgieva, the managing director of the International Monetary Fund (IMF) has however urged members of the crypto community to not abandon these virtual assets just yet. Georgieva showed a soft approach towards the crypto sector while speaking at the ongoing World Economic Forum's annual meeting in Davos, Switzerland.

“I would beg you not to pull out of the importance of this world. It offers us all faster service, much lower costs, and more inclusion,” Bloomberg quoted Georgieva as saying.

In a video clip posted by the IMF official on her Twitter handle, she can be heard emphasising on the need for global lawmakers to regulate the crypto sector and educate investors about the risks and benefits.

Samsung Wins Patent for a Tri-Fold Smartphone With Specialised Barrier Layer for Improved Durability

Central banks and financial service regulators have important responsibilities in the regulation of crypto assets.
Thanks @jchatterleyCNN, Sethaput Suthiwartnarueput, François Villeroy de Galhau and Axel Lehmann for a great discussion on central bank digital currencies. #WEF22 pic.twitter.com/rGyqooaaG8
— Kristalina Georgieva (@KGeorgieva) May 23, 2022

The downfall of Terra earlier this month, has sent shockwaves across the virtual assets industry. The LUNA token, that fell in value by nearly 99 percent over the week, serves as the governance token of Terra.

The plunge of Terra, that started two weeks ago, is largely being blamed on the destabilisation of Terra USD's (UST) peg to the dollar which led to the conversions of UST for LUNA on a mass level.

Balenciaga Lists BTC, ETH as Payment Alternatives to Fiat, Cards

At its peak, Terra was the eighth largest crypto token with a market cap of about $25 billion (roughly Rs. 1,93,150 crore). Its crash seemingly jeopardised the trust of investors on even solid projects.

Georgieva however noted that virtual assets also vary in categorisation and some assets are lesser prone to losses than others.

She said there is also a difference between stablecoins that are backed by cash as well as other assets and those that rely on algorithms to maintain their value, like the Terra coin.

“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 added.

Her statements, seemingly supporting regulation and education around the crypto industry, came as a fresh change of pace from IMF's otherwise reluctant approach to the digital assets space.

The IMF has previously suggested El Salvador to delist Bitcoin as a legal tender citing financial repurcussions.

The IMF MD was speaking as part of a panel that had other guests including Francois Villeroy de Galhau, governor at the Central Bank of France.

The French financial official had different opinions on crypto, as he said that Terra's crash has garnered people's trust in central banks as opposed to cryptocurrencies.

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.

Further reading: Cryptocurrency, Terra, International Monetary Fund, IMF

Radhika Parashar

Email Radhika

Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More