IMF Chief Warns Against Cryptocurrency Hampering the Global Financial System
Chief of the International Monetary Fund (IMF) - Christine Lagarde - has recently issued a red-flag on the current state of the crypto markets saying that cryptocurrencies are “clearly shaking the system”.
Fearing the possible unrest due to cryptocurrencies in the traditional financial space, Lagarde says that it is very important to monitor and regulate the crypto space. Lagarde stresses on the fact that if we have to continue moving ahead with the FinTech innovation, financial regulation in the crypto sector is a must.
Despite the slowdown over the last year, the unique value proposition of cryptocurrencies like instant and low-cost cross border payments continue to attract big players. Recently, banking giant JPMorgan announced that it plans to have its own digital token JPM Coin for instant payments settlements worth trillions of dollars among its global clients.
Similarly, tech giant Facebook is currently talking to several exchanges to list its Facebook Coin among its entire suite of messaging applications like WhatsApp, Facebook Messenger, and Instagram.
Speaking to CNBC, Lagarde said that digital currencies could possibly shake up the banking and finance industries going ahead. She also mentions the disruptive blockchain technology and how it is changing the way that companies do business.
Lagarde notes: “I think the role of the disruptors and anything that is using distributed ledger technology, whether you call it crypto, assets, currencies, or whatever … that is clearly shaking the system.”
Lagarde further notes that proper regulatory actions should simultaneously accompany these disruptions else too much innovation could apparently “shake the system so much that we would lose the stability”.
Unlike other popular personalities, IMF Chief Christine Lagarde has remained open about her views on digital currency. In the last one year, Lagarde has never shied from discussing digital currencies.
During the World Economic Forum 2018, Lagarde spoke openly on cryptocurrencies for the first time. She talked both - the positive and negatives - of the crypto market and how it should be dealt with a constructive thought.
In the past, Lagarde has also said that it won’t be legitimate to completely ignore the presence of cryptocurrencies and even vouched for the idea of having central bank digital currencies.
But with the changing times, Lagarde notes that there need for some right regulatory actions. For finance and technology companies entering the crypto market, Lagarde says that “They will have to be held accountable so that they can be fully trusted.”