International Monetary Fund (IMF) Chairperson, Christine Largarde has called on central banks around the world to consider issuing digital currencies.
According to Largarde, the state and respective national governments have a duty to inject money to the digital economy hence it is necessary to consider the possibility of issuing digital currency though CBDCs.
Prior to this assertion, the IMF boss had at a previous event outlined various benefits attached to the issuance of these currencies by the state. In her words, she remarked:
The advantage is clear. Your payment would be immediate, safe, cheap and potentially semi anonymous…and of course central banks would retain a sure footing in payments.
Largade added that such a move would not only make transactions safer but also more common and consequently cheaper.
Making a case for CBDCs
Speaking further, the IMF Chair explained that since the Central Bank Digital Currency (CBDC) will be under the Government and Central banks jurisdiction as opposed to existing cryptocurrencies which are a free for all; this would make such digital currencies more secure. This she believes is because; government will have no choice but to put in complete resources for the security of these CBDC’s while also ensuring consumer protection, privacy and fraud prevention.
Emphasizing this, she opines:
Private firms may under-invest in security to the extent they do not measure the full cost to society in cases of a payment failure, a trend which most governments through their Central banks are most likely to prevent.
Largade who had before now expressed skepticism about cryptocurrencies, looks to have a change of heart now after stating that cryptocurrencies would pose a threat to the traditional financial system with particular reference to its cheaper cost of transactions, new technologies and more accessibility to consumers.
In all, Largarde believes that even though regulations in the cryptocurrency sector are necessary to minimize risk, she also warns that these regulations should not go overboard so as not to hamper development and innovation in the crypto space.
Different View point for Crypto Enthusiasts
From all indications, the current cashless, Peer-to-Peer transactions and freedom associated with cryptocurrencies has unsettled lots of governments and traditional financial institutions as they look to maintain total control of the financial system. Government and indeed banks have seen the crypto and blockchain potential to challenge the traditional financial institutions and return freedom/ownership of money to the people.
To this end, both entities now move to adopt digital currencies in a bid to stay afloat and possibly maintain control with the emerging financial industry.
For crypto faithful, Largade’s comments do not spur much enthusiasm, as many advocate for a continuity of the basic Bitcoin/cryptocurrency principles of freedom and no third party transactions which for them the involvement of Central Banks and Governments would hinder.
NOTE: Nations like Canada, Sweden and Uruguay are all seriously considering an introduction of their own digital currencies.