President Christine Lagarde Asks to Explore Cryptocurrencies Supported by the State.
CHRISTINE LAGARDE, President of the International Monetary Fund, emphasizes that cryptocurrencies are a response to the decrease in the use of cash in the countries.
Christine Lagarde, has encouraged the exploration of the now called cryptocurrencies (digital currencies) issued by CBDC central banks in light of the decrease in demand for cash and the growing preference for digital money.
In a speech prepared for the Singapore Fintech Festival today, Lagarde said:
“I think we should consider issuing cryptocurrencies, there may be a role for the state to provide money to the digital economy.”
Several central banks around the world are “seriously considering” the issuance of digital currencies (cryptocurrencies), he said, including Canada, China, Sweden and Uruguay. “They are embracing change and new thinking, as the IMF does too.”
Christine Lagarde pointed out that the main cryptocurrencies such as Bitcoin, Ethereum and Ripple are also “competing for a place in the world without cash, constantly reinventing in the hope of offering a more stable value and a faster and cheaper solution”. However, at the same time, the IMF has also criticized once again the view that public cryptocurrencies offer an alternative to CBDCs.
The cons of cryptocurrencies
In a new report, entitled “How to shed light on the cryptocurrency of the Central Bank” and unveiled today along with Lagarde’s speech, the IMF said that “cryptocurrencies are different in many dimensions and strive to fully satisfy the functions of money, in part due to erratic assessments. ” When evaluating different forms of money in the report, such as cash, cryptocurrencies, electronic money and commercial bank deposits, the IMF concluded that “cryptocurrencies are the least attractive option”.
The organization went on to say that cryptocurrencies received a low settlement rate score due to “current technological limitations”, although they acknowledged that they do offer the advantage of anonymity, while technological limitations could be overcome. However, the IMF says research on the digital currency should continue “resolutely”, given that the questions that must be answered are “deep and difficult and have far-reaching implications”. Although there seems to be a movement towards the digital currency, it is not free of risks.
Lagarde said in his speech that digital currencies offer “great promise” in terms of financial inclusion and also provide privacy in payments, but at the same time they could also pose risks to financial integrity and stability. There is also a compromise between privacy and financial integrity, he said, adding that central banks could design a digital currency, but that “controls against money laundering and terrorist financing will nevertheless run in the background.”
Christine Lagarde said:
“This configuration would be good for the users, bad for the criminals and better for the State, in relation to the cash. Of course, the challenges continue to exist. My goal, at this point, is to encourage exploration”.
