The International Monetary Fund’s head said Tuesday that Europe will be able to manage its medium-term fiscal consolidation and growth, despite the rising levels of debt due to the COVID-19 pandemic.
Kristalina Georgieva (Managing Director), spoke remotely at an event hosted in Italy by Bocconi University. She stated that digital currencies backed central banks are the most reliable forms of digital money, and that it is difficult for people to consider Bitcoin and other crypto assets money.
Georgieva stated that Europe was better equipped to avoid another crisis like the one Greece faced in the wake of the global financial crisis.
She said that countries will need to carefully plan how to change course to fiscal consolidation in the medium-term to eliminate the pandemic-related increased debt burden.
Georgieva stated that 110 countries are currently looking into digital currencies at central banks. The key challenge was to ensure interoperability.
“De-facto assets” like Bitcoin do not have a stable value and can fluctuate in price, Georgieva stated.
She stated that the most important consideration for policymakers when considering digital currencies is whether they are a trusted means of exchanging money. The Bank for International Settlements is also examining whether digital currencies can contribute to domestic economic stability as well as how they will fit in with international regulatory frameworks such the ones being developed.
It’s’very impressive’ how the international community, central banks, and institutions like ours are now engaged to ensure that money in the fast-moving world of digitalization is a source for confidence and helps the economy function, rather than being a risk.