Christine Lagarde, the managing director of the International Monetary Fund (IMF), has recently spoken about cryptocurrencies during her speech at the Singapore Fintech Festival, which is happening right now. During her speech, she talked about the blockchain technology and cryptocurrencies.
At her speech, the managing director of the IMF has talked mostly about three topics, which included the changing nature of money and how the Fintech industry could revolutionize it, the role of central banks in the new economy (especially about digital currencies) and the main disadvantages of using cryptos.
As Lagarde pointed out, once upon a time, transactions were validated by coins and all that mattered was whether a coin was valid. However, as commerce grew, coins were a hassle to carry around and the Chinese Paper Money, which was started to be used in the 9th century, started to be important. This way, she says, bills of exchange came into existence.
Upon using this new tool, it mattered more whom you dealt with because you needed to trust the other person. She sees a relationship with the fintech industry because now they are questioning the role of the state in providing money, not only whether to use coins or commercial bank deposits.
Millennials, she believes, are reinventing how the economy with their phones and now data is the new gold. Money, she believes, will become more user-friendly and convenient, as well as become more integrated with social media. Micro payments and online payments will certainly become more secure as time passes.
She affirmed that the demand for cash is decreasing and that this is partly due to the demands of people. Even cryptos as Bitcoin, Ethereum and Ripple are trying to get their spot in the cashless world. The world is constantly reinventing itself and so are these tokens.
Cryptocurrencies, she believes, are trying to get a spot because, differently from what we believe, their future is not assured. While it looks almost certain that the future of money is digital, decentralized technology like the cryptos is directly competing with centralized technology for this spot in the future.
Banks Emitting Digital Money
An important thing that Lagarde has said is that state banks should be ready for dealing with digital money and maybe even creating their own cryptocurrencies. According to her, many banks around the world are considering creating their own digital coins. Countries like Canda, China, Sweden and Uruguay are only some of them.
According to her, it should be a possibility to issue digital currency and that this role should be of the state, even if now private companies and decentralized foundations are doing it. By doing this, the banks could ensure that people had financial inclusion in this new system, security and consumer protection (providing what she believes that the private sector cannot) and privacy in their payments.