WASHINGTON—Count Christine Lagarde as among those who believe cryptocurrencies are disrupting the banking systems.
The head of the International Monetary Fund, in a conversation with CNBC, emphasized that to maintain stability both in the crypto space and the financial ecosystems, digital assets will have to start being monitored.
Lagarde said virtual currencies are forcing the commercial banks not only to amend their business models but to make them rethink the entire systems.
“I think the role of the disruptors and anything that is using distributed ledger technology, whether you call it crypto, assets, currencies, or whatever … that is clearly shaking the system. We don’t want innovation that would shake the system so much that we would lose the stability that is needed,” Lagarde told CNBC.
In the interview, Lagarde noted cash usage was decreasing in many countries, citing Sweden where now only 13% of transactions were still being done using cash.
Private Blockchain Launched
Meanwhile, the IMF has joined with the World Bank in support cryptocurrencies.
The Financial Timessaid that the organizations have launched a private blockchain and quasi-cryptocurrency as part of their efforts to better understand this technology.
Dubbed “Learning Coin,” the asset is not a real cryptocurrency like Bitcoin and would have no monetary value. Importantly, it could be accessed only within the IMF and the World Bank.
In a statement, the IMF said the project aims to bridge the quickly widening knowledge gap brought about by the rapid evolution of the technology.
“The development of crypto-assets and distributed ledger technology is evolving rapidly, as is the amount of information (both neutral and vested) surrounding it. This is forcing central banks, regulators and financial institutions to recognize a growing knowledge gap between the legislators, policymakers, economists and the technology,” the IMF said.
‘Bridge the Gap’
“This project begins to bridge that gap and form a strong knowledge base of the technology among IMF and World Bank staff,” the IMF added.
According to the IMF, the development of Learning Coin has helped the staff of these organizations familiarize themselves with the principles and concepts related to distributed ledgers, crypto assets, smart contracts, and associated challenges like money laundering.