Lagarde & IMF Call Central Banks to Consider Own Crypto
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Nov. 14, 2018
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Christine Lagarde, Managing Director of the International Monetary Fund (IMF) today, November 14, during the Singapore Fintech Festival, called on central banks to change their mindset and study the possibility of issuing their own digital currency in order to compensate for the decline in cash use.

Lagarde said that she is not fully convinced in the concept of cryptocurrency in a broader sense, but she admitted that there could be a place in the economy for state digital currencies or similar instruments.

“I believe we should consider the possibility to issue digital currency. There may be a role for the state to supply money to the digital economy,” she said.

IMF in an Off Mood: Evolving Crypto Threatens Finance

In the beginning of her speech, after a brief introduction into the global history of money evolution, Lagarde has pointed out that even cryptocurrencies that have appeared relatively recently understand the money evolution trend.

“Bitcoin, Ethereum, and Ripple are vying for a spot in the cashless world, constantly reinventing themselves in the hope of offering more stable value, and quicker, cheaper settlement.”

The day before, the IMF has published a report the topic of digital currencies issued by central banks, in which it evaluates the advantages and disadvantages of a financial instrument.

According to Lagarde, several financial jurisdictions already consider the possibility of using the latest inventions from the sphere of fintech to meet their own needs. If initiatives are implemented at a decent level, then such digital currencies “could satisfy public policy goals, such as financial inclusion, and security and consumer protection; and to provide what the private sector cannot: privacy in payments.”

What World Leaders Think Of Crypto

Among the countries where paper money is almost crowded out of daily use, India is in the lead, with China, Singapore, and Canada breathing down its head.

The process of gradual crowding out of cash by electronic means takes place in a natural way since electronic payments reduce the cost of emission of states.

In addition to purely practical conveniences, the digital form of money circulation increases the transparency of operations. However, Lagarde does not just warn that the transition to digital currencies carries a lot of risks. These risks are not institutional, but purely technological and are related to information security, the expert adds. The head of the IMF has emphasized that the risks of slowing down innovation - is the last thing should be done. In her opinion, governments need to be creative about these risks.

“The case is about change- being open to change, embracing change, shaping change,” Lagarde said.

In some countries - in particular, Venezuela and Iran - the monetary authorities thought about turning to crypto without any hints from Lagarde, seeing this as one of the tools for avoiding American sanctions.

IMF Urges Marshall Islands to Drop National Crypto Plan

Earlier, the IMF has urged the Mar­shall Is­lands to for­get about their plan to launch the na­tional crypto. Is­su­ing a 58-pages re­port, the Mon­e­tary Fund called on the au­thor­i­ties of the Mar­shall Is­lands to aban­don the re­lease of its own cryp­tocur­rency, that was to be­come the sec­ond means of pay­ment in the coun­try after the dol­lar and then re­place it. The organization was pointing out that a state which is in a difficult economic situation, in this case, risks losing access to dollar financial flows.

IMF Blockchain Research to Regulate Industry?

Just yesterday the body has ex­pressed its in­ten­tion to use its on­go­ing re­search and ex­per­i­ments in the blockchain as a basis to de­fine a vec­tor for reg­u­lat­ing the in­dus­try.

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