The managing director of the IMF Christine Lagarde has made some significant comments about the future of cryptocurrencies, saying there is a possibility that digital currencies could one day challenge national monies.
The comments were made as part of a talk given at a Bank of England conference are a further sign that the global financial organisation is increasingly coming around to the idea of cryptocurrencies. Lagarde said at one point that virtual currencies may even give “existing currencies and monetary policy a run for their money”.
Lagarde grounded her comments in the idea that average citizens may prefer cryptocurrencies:
“Citizens may one day prefer virtual currencies, since they potentially offer the same cost and convenience as cash—no settlement risks, no clearing delays, no central registration, no intermediary to check accounts and identities. If privately issued virtual currencies remain risky and unstable, citizens may even call on central banks to provide digital forms of legal tender.”
She did, however, have a number of warnings regarding the risk and volatility of currencies like Bitcoin:
“For now, virtual currencies such as Bitcoin pose little or no challenge to the existing order of fiat currencies and central banks. Why? Because they are too volatile, too risky, too energy intensive, and because the underlying technologies are not yet scalable. Many are too opaque for regulators; and some have been hacked.”
But these challenges are not insurmountable:
“But many of these are technological challenges that could be addressed over time. Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays. So I think it may not be wise to dismiss virtual currencies.”
The comments are a significant positive view on cryptocurrencies in the wake of the ban on ICOs by China and North Korea and influential bankers like Jamie Dimon labelling Bitcoin a fraud.
In a talk that was on the topic of how fintech could reshape the world by the year 2040, the fact that a third was dedicated to the subject of cryptocurrencies is a sign that the global financial governance structure is beginning to take the young upstarts seriously.