• 5 hours 3 of the Most Interesting New ETF Themes of 2021
  • 1 day Mid-Term Bitcoin Outlook Remains Murky
  • 3 days Big Business’ New COVID Initiative: No Jab, No Job
  • 5 days The Most Interesting Stocks Of Earnings Season, For Better or Worse
  • 7 days Chinese Stocks Rebound After Regulatory Scare
  • 9 days Apple Stocks Falls After Blowout Earnings Report
  • 9 days The 5 Biggest IPO Disasters Of 2021
  • 10 days Crypto-Based ‘Shadow Financial Market’ Spooks Regulators
  • 13 days Ireland Balks At Biden’s Global Tax Plan
  • 16 days Robinhood To Trade On Nasdaq Targeting $32B Valuation
  • 20 days Facial Recognition Is Watching You
  • 21 days Biden’s $3.5T ‘Human Infrastructure’ Workaround
  • 21 days The Fed’s $3 Trillion Headache
  • 24 days Why Bitcoin Could Struggle To Recover After Epic Crash
  • 24 days Wells Fargo Back In The Spotlight Over Personal Loan Cancellations
  • 25 days Delta Variant Real Threat To Economic Recovery
  • 28 days JEDI Drama Continues With Microsoft Contract Cut
  • 30 days DiDi Shares Take a Beating From Chinese Regulators
  • 31 days Thousands Of Companies Hit In Latest Ransomware Attack
  • 31 days Jobs Report Has Big Numbers, But Still Big Problems
$30,000 Is The New $20,000 For Bitcoin

$30,000 Is The New $20,000 For Bitcoin

Year-to-date, Bitcoin is up more…

  1. Home
  2. Cryptocurrencies
  3. Bitcoin

IMF Calls On Central Banks To Consider State-Backed Crypto

Crypto

Governments have been talking about state-backed digital currencies for at least a year, but 2018 has seen the idea gain significant momentum—if only because crypto is a reality that central banks can’t ignore. But in a way, it would be the death of crypto in its original form because it essentially centralizes an idea that was all about decentralization.

Now, the head of the International Monetary Fund (IMF) seems to be jumping on the band wagon, saying it may indeed be time for the world’s central banks to start seriously thinking about state-backed digital currencies.

“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,” IMF head Christine Lagarde said in a Wednesday statement that follows an IMF paper, “Winds of Change: The Case for New Digital Currency”.

Lagarde—who has headed up the IMF since 2011—says we are at a historical turning point, and the fintech revolution questions our traditional forms of money—coins and commercial bank deposits—“and it questions the role of the state in providing money”.

Still, the IMF head is “not entirely convinced” in the trust expected to be put into crypto, calling for proper regulation.

While the IMF paper examines the pros and cons of a state-back digital currency, the bigger picture, as far as Lagarde is concerned, is that central bank crypto “could satisfy public policy goals, such as (i) financial inclusion, and (ii) security and consumer protection; and to provide what the private sector cannot: (iii) privacy in payments”.

The paper itself notes several central banks are “actively investigating the possibility of a central bank digital currency (CBDC) […] which would be a widely accessible digital form of fiat money, intended as legal tender. One day, it could fully replace physical cash”.

In fact, the IMF says, it “seems to be a natural next step in the evolution of official coinage”.

So, while the IMF is calling on all central banks to roll out a state-backed digital currency, it is saying that it’s time to start seriously considering the move because whether anyone wants it or not, digital is the reality in which we live.

And if the world of money is going to be fully digitized, leaving it in the hands of private firms, says the IMF head, is inviting disaster because they “do not measure the full cost to society of a payment failure”, when it comes to cyber-attacks, glitches or bankruptcies, people remain unprotected. Related: New A.I. Virtual Assistant Gives Traders An Edge

It may even have reached a critical point, especially for rural populations, says Lagarde. Cash may no longer be an option soon, and “if the majority of people adopt digital forms of money, the infrastructure for cash would degrade, leaving those in the periphery behind”.

Of course, not everyone’s on board. Switzerland, which has always been crypto-friendly, is waffling. Earlier this year, Thomas Moser, board director of Swiss National Bank (SNB), told a blockchain conference that CBDCs were of dubious usefulness, comparing existing blockchain to the innovation of Compact Discs. He said “enthusiasm has slowed again because of the implications it would have for financial stability.”

And crisis-ridden Venezuela’s state-backed crypto isn’t a shining example of how this is supposed to work.

But, as Lagarde pointed out, Canada, China, Sweden and Uruguay are already seriously considering a state-backed digital currency, “as indeed is the IMF”.

By David Craggen for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment