Speaking before an audience at the Singapore Fintech Festival 2018, the managing director and president of the International Monetary Fund Christine Lagarde took the case of the digital currency.
"A new wind is blowing, that of digitization.In this new world, we meet everywhere, at any time.The city square is back – practically, on our smartphones.We exchange information, services, even emojis, instantly … peer to peer, from person to person.We navigate through a world of information, where data is the "new gold", despite growing concerns about privacy and cyber security.A world where millennials are reinventing the way our economy, the phone in hand. "
Lagarde illustrates how new forms of money will make their way into everyday use.
- Through social media, readily available for online and person-to-person usage, including micro-payments
- It will be cheap and safe, protected by criminals and prying eyes
Lagarde indicates a series of signs that indicate digitization.
The key signs of an emerging digital economy
- Signs in the shop windows read "cash not accepted"
- Bank deposits feel the pressure of new forms of money
- Electronic money from AliPay and WeChat in China, PayTM in India, M-Pesa in Kenya
According to Lagarde,
"Even cryptocurrencies like Bitcoin, Ethereum and Ripple are competing for a place in the cashless world, reinventing themselves constantly in the hope of offering a more stable value and a quicker and cheaper deal."
Advantages of digital currencies
- Reaching people and businesses in remote and marginalized regions
- Backup of payment methods
- Economical and efficient alternative
- private life
Disadvantages and risks of digital currencies – more creative solutions
- Despite the risks to financial integrity, the programmable money of central banks could allow regulators to "lift the veil of anonymity" if suspicions emerge.
- Despite the risks to innovation, since central banks cover everything from digital portfolios, tokens, back-end settlement services, new public-private partnerships would allow central banks to manage back-end regulation, while financial institutions and start-ups focus on customer interface and innovation.
- Despite the risks to financial stability due to pressure on bank deposits, "the jury is still out if digital currencies really upset financial stability".
Lagarde says we should embrace change.
"My message is that while the case of digital money is not universal, we should investigate it further, seriously, carefully and creatively More fundamentally, the case is about change: being open to change, accepting change, shaping change. it will change, and so will I. To keep the last leaf on a dead branch, the others have decided to fly with the wind. "
The Singapore Fintech Festival, which ran from 12 to 16 November, attracted over 250 global representatives of central banks and regulatory agencies, financial institutions, venture capital firms and fintech who have made a wide range of presentations regarding monetary policy and the future of blockchain, digital assets and cryptocurrencies.
You can download the complete speech here.
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