IMF’s Lagarde Thinks ‘Virtual Currency’ Shouldn’t Be Dismissed

Bitcoin Magazine

Christine Lagarde, managing director of the International Monetary Fund (IMF), gave a speech at a Bank of England conference titled “Central Banking and Fintech — A Brave New World?”

Lagarde uses the term “virtual currency” essentially as a synonym of “cryptocurrency.” According to Lagarde, virtual currencies such as bitcoin pose little or no challenge to the existing order 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,” she added.

On the other hand, continued Lagarde, current technical challenges could be solved and the use of virtual currencies could grow exponentially, especially in countries with weak institutions and unstable national currencies. Virtual currency could also open the door to better payment services and new models of financial intermediation.

“[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,” concluded Lagarde. “If privately issued virtual currencies remain risky and unstable, citizens may even call on central banks to provide digital forms of legal tender.”

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