Christine Lagarde, a French lawyer and politician who is currently appointed as the managing director and chairwoman of the International Monetary Fund (IMF), has said “we should consider the possibility to issue digital currency.”
Lagarde’s comments regarding cryptocurrencies came as she delivered a speech at a conference in Singapore (on November 14th).
"Safe, Cheap, And Potentially Semi-Anonymous"
The former French minister of Economic Affairs noted that blockchain technology is “safe, cheap, and potentially semi-anonymous", and that central banks throughout the world should explore the use cases for their own cryptocurrencies.
Lagarde added that all countries can look into whether a state-issued digital currency would help in “supplying money to the digital economy.” She explained that digital money has the potential to promote economic and financial inclusion - as a large percentage of the world’s population still does not have access to modern banking services.
Lagarde also called on authorities worldwide to focus on developing infrastructure for a digital financial system, and create regulations to monitor cryptocurrency transactions.
Digital Currencies May Help Create A "More Level Playing Field"
She emphasized the importance of developing a regulatory framework for digital currencies as they will help ensure consumer protection and prevent them from being used to finance illicit activities.
Commenting on the benefits of using digital payments, Lagarde remarked:
The advantage is clear. Your payment would be immediate, safe, cheap, and potentially semi-anonymous. And central banks would retain a sure footing in payments. In addition, they would offer a more level playing field for competition, and a platform for innovation. Meanwhile, your bank or fellow entrepreneurs would have ensured a friendly user experience based on the latest technologies.
Lagarde, who has been the chairwoman of the IMF since 2011, further noted that state-backed digital currencies would help prevent large payment technology firms from creating monopolies.
"Seriously, Carefully, Creatively" Exploring Digital Currencies
She also mentioned that "the more people you serve”, the more economical and practical it could become to use central bank digital currencies (CBDC). Moreover, she explained that we cannot fully rely on private firms when it comes to dealing with security issues related to conducting cross-border transactions.
According to Lagarde, private financial service providers “may under-invest in security to the extent they do not measure the full cost to society of a payment failure."
The IMF head also pointed out that the case for digital currencies “is not universal” and that their potential applications should be looked into “seriously, carefully, and creatively."