fbpx
Money

Bitcoin Tools Could Make Finance System Safer, Says IMF Chief Christine Lagarde

The advance of bitcoin and other digital currencies could make the global financial system safer despite the prospect of “inevitable” accidents waiting to happen, the head of the International Monetary Fund has said.

Christine Lagarde said some tools built using the technology behind bitcoin, which are known collectively as crypto-assets, hold the potential to revolutionize the world of high finance by making it faster, cheaper and safer. Among them, there are “real threats and needless fears”, she said.

Writing in a blogpost as politicians and central bankers gather in Washington for the IMF’s regular spring meetings, she said there was hope for a world where firms using digital currencies could coexist alongside traditional banks.

That level of diversity could build a “financial ecosystem that is more efficient and potentially more robust in resisting threats”, she said.

An increasing number of consumers have used cryptocurrencies as an alternative to the old ways of holding and moving money and prefer them to traditional banks, which crashed in the 2008 financial crisis. However, many have lost money from volatile price movements and after some cryptocurrency exchanges have been hacked.

Lagarde has previously issued warnings over the risks posed by bitcoin and other digital currencies, calling for global regulators to stage a crackdown by using its technology to “fight fire with fire”.

Last month, she said authorities around the world could harness the potential of cryptocurrencies to help bring them under control. Failure to do so would allow the unfettered development of a “potentially major new vehicle for money laundering and the financing of terrorism,” she added.

The governor of the Bank of England, Mark Carney, has called Bitcoin and other cryptocurrencies “inherently risky” and that they have failed to fulfil their most basic function as money. Bitcoin hit almost $20,000 (£13,958) in value in the run-up to Christmas, before crashing by more than half earlier this year.

But ahead of the IMF’s forthcoming global financial stability report, which looks at emerging risks from the world of banking, Lagarde said there were merits from looking again at crypto-assets. “A clear-eyed approach can help us harness the gains and avoid the pitfalls,” she said.

Comparing recent developments to the advances of the 1990s – when thousands of technology companies were started only to collapse a few years later during the dot-com crash – she said many crypto-assets were bound to fail. More than 1,600 digital currencies are in circulation, having ballooned in number in recent years.

However, just as a few technologies that emerged during the dot-com era have since transformed the world, she said crypto-assets that survived this process of “creative destruction” could have a significant impact on how we save, invest and pay our bills.

This story originally appeared in The Guardian.

Join The Discussion

700,000 Sign UK Petition To Stop Brexit And Stay In EU
700,000 Sign UK Petition To Stop Brexit And Stay In EU
New Zealand Begins Funerals For Mosque Shooting Victims
New Zealand Begins Funerals For Mosque Shooting Victims [Video]
Over 1,000 Feared Dead After Cyclone Idai Hits Mozambique
Over 1,000 Feared Dead After Cyclone Idai Hits Mozambique [Video]
Flash Floods, Earthquake In Indonesia Kill Dozens
Flash Floods, Earthquake In Indonesia Kill Dozens [Video]
Why Africa Continues To Lag Behind In Cryptocurrency Adoption
Why Africa Continues To Lag Behind In Cryptocurrency Adoption
Paris Blockchain Week Summit
Paris Blockchain Week Summit [Podcast]
Where The Funds Go On Crypto Exchanges And OTC Desks
Where The Funds Go On Crypto Exchanges And OTC Desks
Why Most Educated People Fail To Understand Bitcoin
Why Most Educated People Fail To Understand Bitcoin
Social Media Platforms Going Dark Should Be A Wake Up Call
Social Media Platforms Going Dark Should Be A Wake Up Call
Why You Shouldn't Put All Your Focus On Only One Social Media Network
Why You Shouldn’t Put All Your Focus On Only One Social Media Network
The Videos Your Customers Want To See On Social Media
The Videos Your Customers Want To See On Social Media? [Infographic]
5 Ways To “Trick” The Facebook Algorithm For More Engagement
5 Ways To “Trick” The Facebook Algorithm For More Engagement
10 LinkedIn Mistakes You Don't Realize You're Making
10 LinkedIn Mistakes You Don’t Realize You’re Making
Which Social Media Platform Should Your Business Use In 2019
Which Social Media Platform Should Your Business Use In 2019? [Infographic]
Snapchat To Launch Gaming Platform Next Month
Snapchat To Launch Gaming Platform Next Month
How Long Should A YouTube Video Be
How Long Should A YouTube Video Be? [Video]
6 Hottest Cannabis Products In 2019
6 Hottest Cannabis Products In 2019
10 Easy Ways To Be Healthier In 2019
10 Easy Ways To Be Healthier In 2019
9 Questions To Ask Your Network To Help You Find Your Path
9 Questions To Ask Your Network To Help You Find Your Path
What Is Your Therapist Listening For
What Is Your Therapist Listening For?
700,000 Sign UK Petition To Stop Brexit And Stay In EU
700,000 Sign UK Petition To Stop Brexit And Stay In EU
New Zealand Begins Funerals For Mosque Shooting Victims
New Zealand Begins Funerals For Mosque Shooting Victims [Video]
Apple Announces New iPad Air And iPad Mini
Apple Announces New iPad Air And iPad Mini [Video]
Over 1,000 Feared Dead After Cyclone Idai Hits Mozambique
Over 1,000 Feared Dead After Cyclone Idai Hits Mozambique [Video]