Bitcoin and other crypto-currencies are changing the world of Finance. This phenomenon Christine Lagarde responded to in her speech in Singapore. The Director-General of the International monetary Fund, went on the ways on how the IMF might respond to the digital transformation.

By Phillip Horch
14. November 2018 share Facebook Twitter LinkedIn xing mail

Christine Lagarde suggested last year, a conciliatory tone when it came to the valuation of Bitcoin and other crypto-currencies. So it was mainly the pressure on Central banks, which can be of crypto-currencies, Lagarde pointed out. Also, the chances of that crypto-currencies can offer for most economically troubled countries, stressed the Head of the International monetary Fund – as we reported. In your recent speech, you suggested to take advantage of these benefits – for a digital Central Bank money.

The Winds of digitisation

Christine Lagarde spoke again to the change that digital currencies such as Bitcoin, Ethereum, and Ripple in the world. So you spoke of a Wind of digitisation, Woe to the world:

„A new Wind is blowing, the of the digitization. In this new world, we meet everywhere and at any time. The marketplace is virtually on our Smartphones. We exchange information, services, and even Emojis directly…. Peer-to-Peer, Person-to-Person.“

And all this Wind, at least in significant part, of the changing financial technology. Lagarde thus:

„We move through a world full of information, in the data, the ’new Gold‘ – in spite of the growing concerns regarding data privacy and cyber security. A world in which Millennials the functioning of our economy to re-invent; with the phone in Hand. And that is the key to everything: The money itself is changing. We expect it to be more convenient and user-friendly, while it looks like perhaps a lot of MIS -.“

cash vs. Bitcoin

In this world, cash will lose eventually, its meaning:

„What will be the role of the cash in this digital world? Already you can see signs in shop Windows that say: ‚cash not accepted‘. […] Who paper exchanges in ten, twenty, thirty years? […] Self-crypto-currencies such as Bitcoin, Ethereum and Ripple are competing for a place in the cashless world and constantly reinvent, in the hope of a more stable value and a faster and cheaper resolution to offer.“

The role of Central banks

However, Christine Lagarde does not trust the peace. She maintains her line from 2017 true: crypto-currencies offer advantages, the technology had not yet matured completely. Therefore, the pure confidence in the technology, your not enough, you need a Central editor.

„crypto-currencies try in turn, the confidence in the technology. As long as you are transparent and you yourself are technically savvy – you can trust their services. However, I’m not quite convinced. The proper regulation of these units will remain a confidence pillar.“

so What is the solution proposed by the IMF Chief? A Central point in the regulated Bitcoin & co., can’t give it. Therefore, Lagarde is considering the possibility to try a publication of crypto-currencies by Central banks:

„in My opinion, we should consider the possibility of the output of digital currencies. It is for the state to, perhaps, a role in which he provides money for the digital economy. This currency could meet the public policy objectives, such as financial inclusion, as well as safety and consumer protection and the private sector can offer, what he can’t: privacy in payments.“

a New Paper from the IMF will be discussed, discusses the role of Bitcoin & co.

Ultimately, Lagarde a to a new Paper from the IMF, in which the pros and cons for crypto – currencies by Central banks. It States:

„crypto-currencies are different in many dimensions and have problems to comply with the requirements of currencies, partly because of their unpredictable assessment. Examples are Bitcoin, Ethereum and Ripple. These currencies are not subject to the liability of an institution and are not secured by Assets. Their value is usually volatile, since most of them have rigid Emissions.“

So both Lagarde as well as the Paper of the IMF come to the conclusion: Digital Central Bank money will come.

, for users of Bitcoin & co. will not change anything. Also, until it come to the reversal, it will take some time. Until then, it will be interesting to see if crypto-currencies can settle in their development, ultimately, as an Alternative. Ultimately, it will be a digital representation of the current system. Prof. Dr. Fabian Schär of the University of Basel, author of a Paper on the topic:

„Electronic Central Bank money will come and I think this development is fundamentally to be welcomed. But you should be aware that it will be crypto-currencies in the real sense. All of the known projects using, in Essence, a centralized database and restrict the access in part, in a not-insignificant extent.“

Centralized Central Bank money

The digital Form of a centrally issued money is ultimately the antidote to a decentralized money system such as Bitcoin. The IMF is trying to take advantage of the benefits of crypto-currencies and the existing System to continue.