Cryptocurrency: IMF Managing Director suggests central banks to issue digital currency
Managing Director, International Monetary Fund (IMF), Christine Lagarde has suggested central banks globally to consider issuing digital currency to make transactions more secure.
In a speech given at the Singapore Fintech Festival, the IMF chief argues that a CBBD could satisfy public policy goals, such as financial inclusion, security and consumer protection and enable privacy in payments.
According to her,
“There may be a role for the state to supply money to the digital economy. Pointing out some of the huge advantages of blockchain technology which drives cryptocurrencies, Lagarde said: ”Your payment would be immediate, safe, cheap and potentially semi-anonymous. And central banks would retain a sure footing in payments.”
“Regulations may not be able to fully address these downsides, Lagarde said, but a digital currency could offer a number of advantages, particularly as a backup means of payment. “And it could boost competition by offering a low-cost and efficient alternative — as did its grandfather, the old reliable paper note,” Lagarde said. She added that although the case for virtual currencies “is not universal,” it should be investigated “seriously, carefully and creatively.”
However, regarding the risks posed to the continuing role of commercial banks, Lagarde argues for a partnership approach between central banks and the private sector in such a way that “the central bank focuses on its comparative advantage — back-end settlement — and financial institutions and start-ups are free to focus on what they do best — client interface and innovation. This is public-private partnership at its best.”