Christine Lagarde, outgoing chairman on the International Monetary Fund, has called for further regulatory support for digital currencies and assets in a statement prepared for the Economic and Monetary Affairs Committee of the European Parliament.
Lagarde, who will vacate her IMF post to replace the ECB’s Mario Draghi at the helm of the European Central Bank on November 1st, used the document to tell committee members that “central banks are increasingly facing new types of challenges, not least related to climate change, the disruptive impact of technological change, and the potential fragmentation of the current multilateral order,” before adding that this made it essential that “monetary policy is forward-looking.”
She went on to say that “In this environment... central banks and supervisors need to ensure the safety of the financial sector, but also to be open to the opportunities provided by change."
In the case of new technologies – including digital currencies – that means being alert to risks in terms of financial stability, privacy or criminal activities, and ensuring appropriate regulation is in place to steer technology towards the public good.”
It was essential, she concluded that those with the power to shape regulation noted the "wider social benefits from innovation," and allowed technology "space to develop.”
Winds of Change
Late last year, Lagarde used a speech at the Singapore Fintech Festival to make "The Case for a New Digital Currency".
Rather provocatively titled Winds Of Change, her treatise told the audience that while "change can appear daunting, destabilizing, even threatening" that modern financial systems "where data is the 'new gold'" need a form of money that integrates with them. However, rather than espousing adoption of existing cryptocurrencies and digital platforms, Lagarde made the case for the growth of Central Bank Digital Currencies, such as those proposed by China, saying she is "not entirely convinced" by trustless systems.
However, "Technology will change, and so must we" she conclude. "Lest we remain the last leaf on a dead branch, the others having decided to fly with the wind."
IMAGE: World Economic Forum from Cologny, Switzerland - The Global Economic Outlook: Christine Lagarde, Martin Wolf Uploaded by January, CC BY-SA 2.0,