IMF chief says Europe can avoid debt crisis, hard to think of Bitcoin as money

FILE PHOTO: Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), remarks at a closing press conference of the International Monetary Finance Committee (IMFC), at the 2019 annual meetings of the IMF and the Bank Meeting of Finance Ministers and Bank Governors, in Washington, United States, October 19, 2019. REUTERS / Mike Theiler

WASHINGTON (Reuters) – Fiscal consolidation and medium-term growth will put Europe on solid footing to avert another sovereign debt crisis despite rising debt levels caused by the COVID-19 pandemic, the head of the International Monetary Fund said on Tuesday.

Managing Director Kristalina Georgieva, speaking remotely at an event hosted by Bocconi University in Italy, said she views central bank-backed digital currencies as the most reliable form of digital currency and that ‘it was hard to think of Bitcoin and other crypto assets as money. .

Georgieva said Europe was better able to avoid another debt crisis like the one Greece faced following the 2007-08 global financial crisis.

But she said countries should plan carefully how to move to medium-term fiscal consolidation to erase the increased debt burden associated with the pandemic.

Georgieva said 110 IMF member countries are at some stage of reviewing central bank digital currencies, and a major challenge was how to ensure interoperability of digital currencies.

“De facto assets” like Bitcoin are not backed by assets whose value is stable and can rise and fall sharply, Georgieva said, adding: “In the history of money, it is difficult to think of them as money.”

She said the main consideration for policymakers exploring digital currencies is whether they can be a medium of exchange that the public can trust. Other considerations are whether digital currencies contribute to national economic stability and how they fit into international regulatory frameworks, such as those developed by the Bank for International Settlements.

It is “very impressive to see how the international community, central banks, institutions like ours are now actively engaged in ensuring that in this rapidly changing world of digitization, money is a source of trust. and helps the economy to function rather than (be) a risk. “

Reporting by Andrea Shalal and David Lawder; Editing by Giles Elgood

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