Central Banks Should Consider Their Own Cryptocurrencies – IMF’s Christine Lagarde

News | November 14, 2018 By:

Christine Lagarde, the head of the International Monetary Fund (IMF), said central banks should consider offering their own cryptocurrencies.

Speaking at the Singapore Fintech Festival, Lagarde praised cryptocurencies for being “safe, cheap, and potentially semi-anonymous” and urged central banks around the world to consider creating their own.

“I believe we should consider the possibility to issue digital currency,” Lagarde said. “There may be a role for the state to supply money to the digital economy. Various central banks around the world are seriously considering these ideas, including Canada, China, Sweden, and Uruguay. They are embracing change and new thinking—as indeed is the IMF.

Lagarde said that central banks should work quickly in establishing digital currency for burgeoning networks of private financial transactions to prevent the systems becoming havens for fraudsters and money launderers.

“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,” Lagarde said. “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.”

Lagarde also believes that a central bank digital currency 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.

Regarding financial inclusion, Lagarde said that digital currency offers great promise, through its ability to reach people and businesses in remote and marginalized regions.

“We know that banks are not exactly rushing to serve poor and rural populations,”Lagarde said. “This is critical, because cash might no longer be an option here. If the majority of people adopt digital forms of money, the infrastructure for cash would degrade, leaving those in the periphery behind.”

Legarde concluded by urging central banks to be unafraid and embrace change in technology.

“I suggest we follow a girl. A young girl. A fearless girl. If you are lucky, you might be able to meet her in person in New York’s financial district,” Lagarde said. “She is bold. She is brave. She is confident. She faces forward, toward the future, with grit and determination — a future she herself is going to shape, with eyes wide open, eagerly, steadily.”