Managing Director of International Monetary Fund Christine Lagarde has stated that digital currencies and crypto-currencies are having a strong impact on international banking system so they must be monitored to retain stability. She said that its use of distributed ledger technology is shaking up financial system and these changes must be balanced out with regulations. She insisted that innovation is fine but it should not shake up existing systems so much that stability is lost. Her comments were made during a panel discussion at Spring Meetings of IMF being held in Washington.
During these meetings participants were discussing and examining changing trends of payments and money transfers across the world. In the past too she has urged central banks to study the workings of digital currencies to keep themselves aware about how the trend has made changes in financial landscape. A vast majority of bitcoins or digital currencies that are floating in the market today are not controlled by any central authority. She asserted that in today’s world cash is diminishing fast and with increased use of smart phones person to person payment systems are becoming popular across the world specifically in places like China, Kenya and Europe.
During the discussion at Spring Meetings of IMF CEO Jeremy Allaire of Circle was quick to draw a link between rising use of crypto-currencies and person to person payments. Though systems like WeChat and Allpay offer good user experience crypto-currencies are endemic to the internet it uses. In the past, Ms Lagard has regarded digital currency as a promising form of exchange due to its capability of reaching people and businesses in the most remote areas where local banks avoid serving poor rural populations. In these areas where cash is not an option people can adopt digital money for all kinds of transactions and over a period of time cash infrastructure would degrade by itself.