International Monetary Fund chief call for central bank backed digital currencies

Galtero Lara
Noviembre 15, 2018

Christine Lagarde, the Managing Director of the International Monetary Fund (IMF), praised the advantages of cryptocurrencies by saying that crypto payments are "immediate, safe, cheap, and potentially semi-anonymous".

However, Lagarde's calls for digital currencies sponsored by central banks are likely to be met with indignation by many cryptocurrency hardliners, who advocate the foundational principles of bitcoin.

The state's role in regulating money has been changed by financial technology revolution.

"The fintech revolution questions. coins and commercial deposits, and it questions the role of the state in providing money", she said.

But millennials are reinventing how economies work.

The more people you serve, the cheaper and more useful the service.

"And of course, we expect it to be cheap and safe, protected against criminals and prying eyes", she added.

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"My message is that while the case for digital currency is not universal, we should investigate it further, seriously, carefully and creatively", she said. The research shows that with appropriate design, Central bank digital currency could meet public policy goals, including financial inclusion, security and consumer protection; It could also provide what the private sector cannot: privacy in payments.

The more commonly traded cryptocurrencies include bitcoin, ethereum and dogecoin.

Private firms, she worries, may under-invest in security. Trust in digital currencies would be eroded in the event of a private system breakdown.

Citing the example of central banks in Canada, China, Sweden and Uruguay, which are all "seriously considering" the introduction of their own digital currencies, Lagarde said a state-issued cryptocurrency would be a liability of the state, just like fiat money. "And central banks would retain a sure footing in payments". They tend to see bitcoin as a currency that was built for freedom by resisting any form of control, especially that exerted by governments.

However, companies that are looking to use blockchain technologies for their business operations, will welcome IMF's position and the potential involvement of central banks.

Images courtesy of Shutterstock.

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