Director of the IMF or International Monetary Fund, Tobias Adrian, stated the problems of stablecoins that have existed to date.
He stated that stablecoins not based on fiat money guarantees and are algorithmic will continue to be problematic and can reduce investor confidence in stablecoins.
IMF Discusses Stablecoin Problems
This condition, according to him, is also caused by the crypto market, which is currently in a harmful situation.
The complete statement he made in an interview with Yahoo Finance on July 27, 2022, where he raised the issue of current stablecoins.
Tobias Adrian, Director of the Monetary and Capital Markets Division of the IMF, stated that there would be a decline in confidence in stablecoins due to problems with stablecoins.
“We can see higher selling volume in crypto assets and other risky assets such as stocks. We can also see a lot of failure from the initial sales of some cryptos especially stablecoins which recently collapsed and will lead to other stablecoins being destroyed,” he said.
He also stated that the vulnerabilities of stablecoins, especially fiat-based stablecoins such as USDT, which have recently had transparency issues, will be exposed to the public.
This condition can decrease the type of stablecoin in circulation due to the sale of untrusted stablecoins.
The good news is that this condition can create a natural selection for stablecoins so that only good stablecoins remain.
Tobias Adrian further stated that his stablecoin needs good regulation worldwide to protect investors.
He also added that the regulation needed is regulation to protect investors, so it should be the primary focus rather than determining whether crypto moves like stocks or not. For now, Tobias Adrian still has a supportive view of stablecoins. Still, he considers that stablecoins need good protection regulations and predicts there will be a drastic decrease in volume if the law is not established.
Report on Potential Recession Until 2023
Apart from that, IMF has just published a report that has become a negative sentiment for the crypto and risk asset markets.
This report is on global economic conditions in 2022 and predictions of global financial needs in 2023. The
IMF stated that the global economy will decline from 3.2% in 2022 to 2.9% in 2023 due to geopolitical and macroeconomic conditions that are still not improving.
The IMF also stated that it is still unclear when the world economy will recover in the future.
Furthermore, in the report, the IMF also provides details on which countries and commodities and basic goods affect this condition.
For now, the IMF has stated that the three major countries that generally affect the global economy, namely America, Russia, and China, are experiencing a bad economy.
Europe is also experiencing a drastic decline in its economy, thus worsening the world economy.
Given that many countries are economically tied to America, Russia, China, and Europe, the decline for these countries is also a decline for most countries worldwide.
Commodities focused by the IMF are still focused on energy such as oil and staples such as food to ensure that prices do not rise too high in most countries.
The IMF stated that the current economic condition is still terrible and will continue to move poorly. So, people’s purchasing power will likely continue to decline, making investment ability drop.
If the investment ability decreases, the volume of buying transactions from crypto will likely decrease because crypto is classified as an investment asset almost all over the world.
Given the size of the IMF’s position in the world economy, it is likely that this news will become a negative sentiment that will continue to depend on in the long term.
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