IMF’s Lagarde Warns Banks: Cryptocurrencies Will Bring “Massive Disruptions”
The head of the International Monetary Fund (IMF) has stated that central banks and banking providers should start taking cryptocurrencies seriously.
Christine Lagarde, managing director of the IMF was speaking to media at the IMF Annual Meetings in Washington D.C when she said global financial giants risk being blindsided by new financial innovations like cryptocurrencies.
Speaking to CNBC, Lagarde stated:
I think we are about to see massive disruptions.
“The ways in which new technologies are lowering the cost to make financial transactions more accessible, even in very small numbers…I think it’s already massively disruptive,” she added
The influential financial figure’s comments contrast to those made by Wall Street banker Jamie Dimon, chief executive of JP Morgan Chase. Dimon, a noted bitcoin critic, has frequently belittled bitcoin as “a waste of time”, calling the cryptocurrency a “fraud” in a much-publicized recent critique. Lagarde disagreed with Dimon while speaking with CNBC, claiming it would be wise to “be aware of not categorizing anything that has to do with digital currencies in those speculation, ponzi-like schemes.”
It’s a lot more than that as well.
Asked if the IMF would develop its own cryptocurrency someday, Lagarde revealed the IMF’s Special Drawing Right (SDR), an internally developed currency that functions as an international reserve asset swappable with international currencies, could soon incorporate blockchain technology for increased efficiency at lowered costs.
Two weeks ago, Lagarde was speaking at the Bank of England’s conference in London where she stated cryptocurrencies like bitcoin could give central bank-issued currencies and existing monetary policies “a run for their money”. She called on central bankers to “be open to fresh ideas” and that it “may not be wise to dismiss virtual currencies.”
Lagarde has previously praised cryptocurrencies and its underlying blockchain technology, for their potential to deepen financial inclusion. In early 2016, the IMF chief presented a 42-page report and overview of cryptocurrencies at the World Economic Forum.
It’s a noteworthy departure from Lagarde’s previously dismissive stance on decentralized technologies. Speaking at a 2015 banking conference in New York, Lagarde told bankers they needn’t worry about bitcoin or blockchain technology.
“Many of you have heard about not only bitcoins but blockchains and that unbelievable technology that underlies the Bitcoins of this world at the moment, and how incredibly convenient it will be to actually generate trust and identify players and whatever pseudo they decide to use,” she told a crowd of bankers. “And many of you in the industry are actually worried that those technologies are going to massively disrupt the current industry.”
It’s been less than two years since and Lagarde has now warned the global banking and financial industry, as well as central banks, to pay closer attention to cryptocurrencies.