Bitcoin News

IMF’s Christine Lagarde tackles changing nature of money

IMF Managing Director Christine Lagarde has put forward the case for central bank digital currencies.

In a speech at the Singapore FinTech Festival, she observed that some are suggesting the state should back down. Providers of e-money argue that they are less risky than banks, because they do not lend money. Instead, they hold client funds in custodian accounts, and simply settle payments within their networks.

For their part, cryptocurrencies seek to anchor trust in technology. So long as they are transparent, and if you are tech savvy, you might trust their services, she commented. “Still, I am not entirely convinced. Proper regulation of these entities will remain a pillar of trust. Should we go further? Beyond regulation, should the state remain an active player in the market for money? Should it fill the void left by the retreat of cash?”

More specifically, should central banks issue a new digital form of money? This could be a state-backed token, or perhaps an account held directly at the central bank, available to people and firms for retail payments. “True, your deposits in commercial banks are already digital. But a digital currency would be a liability of the state, like cash today, not of a private firm.”

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.”

Pros and cons

Lagarde’s comments came as the IMF released a new paper on the pros and cons of central bank digital currency, focusing on domestic, not cross-border effects. 

“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. This 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,” Lagarde said.

Scott Thompson

Scott has been working in technology and business journalism for nearly 20 years, with a focus on FinTech, retail, payments and disruptive technology. He has been Editor of such titles as FStech, Retail Systems and IBS Journal and also contributed to the likes of Retail Technology Innovation Hub, PaymentEye, bobsguide, Essential Retail, Open Banking Hub, TechHQ and Internet of Business.

Disqus Comments Loading...

Recent Posts

Zircuit Launches ZRC Token: Pioneering the Next Era of Decentralized Finance

George Town, Grand Cayman, 22nd November 2024, Chainwire

2 hours ago

The surge of Bitcoin NFTs: Everything you should know about Bitcoin ordinals

From digital art to real-estate assets, NFTs have become a significant attraction for investors who…

4 weeks ago

MEXC Partners with Aptos to Launch Events Featuring a 1.5 Million USDT Prize Pool

Singapore, Singapore, 21st October 2024, Chainwire

1 month ago