- The head of IMF supports the idea of state-backed cryptocurrencies.
- The cryptocurrency operators won't be happy.
Cryptocurrency industry has found an unlikely supporter. The head of the International Monetary Fund Christine Lagarde praised blockchain technology for being "safe, cheap, and potentially semi-anonymous" and said that global central banks should consider issuing their own cryptocurrencies.
“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 speaking at the Singapore Fintech Festival after the release of an IMF paper titled “Winds of Change: The Case for New Digital Currency.”
She believes that digital money can foster financial and economic inclusion and work well for remote regions with limited access both to cash and banking services. Apart from that, Mrs. Lagarde is concerned that the nascent industry will fall into the hands of scammers and money-launders if the governments don't move fast to create digital cash for private financial transactions.
“The advantage is clear. Your payment would be immediate, safe, cheap, and potentially semi-anonymous. And central banks would retain a sure footing in payments. In addition, they would offer a more level playing field for competition, and a platform for innovation. Meanwhile, your bank or fellow entrepreneurs would have ensured a friendly user experience based on the latest technologies," she went on explaining the benefits.
According to Christine Lagarde, a former lawyer and the head of IMF since 2011, state-backed coins can reduce the harmful effect of monopolies of traditional payment companies.
Major cryptocurrency operators will hardly be happy with Lagard's idea as they believe that digital assets should lie outside the mainstream financial system. Moreover, the involvement of central banks can lead to tighter regulation, which will, in turn, make transactions costlier and slower.
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.