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Lagardo: Central banks must consider cryptomania emissions

Digital names issued by central banks can help improve financial inclusion and secure payments.

Nov. 18, 2018 at 17:39 TASR

SINGAPORE. Central banks must think about the problem of digital currencies because we are in a time when money is changing, thought Christine Lagard, head of the International Monetary Fund (IMF).

Lagarda on Wednesday (November 14) spoke with a speech at the Singapore Fintech Festival.

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Variability of money

He highlighted the volatile nature of money and showed that cash demand throughout the world is now declining. The central bank, according to him, has the role of delivering money to the digital economy.

Also read: The Monetary Fund warns Britain of hard brexite

"I think they should consider the possibility of emitting digital currency," Lagarde said.

Digital currencies issued by central banks can help increase financial inclusion and secure payments as an inexpensive and effective alternative to banknotes.

Lagarda, however, also warns of the risks associated with cryptomas. "I just want to say that even if the cryptomain support argument is not universal, we have to examine them seriously, carefully and creatively."

Increased non-cash payments

Centralized banks throughout the world are investigating how increasing payments without money will affect their traditional role in driving money and managing the money supply.

Lagarda has warned that central banks of China, Canada, Sweden and Uruguay have captured this change and tried to think about how to offer digital currency to the public.

Also read: The head of the Monetary Fund is asking leaders to improve the global trade system

For example, the Swedish central bank (Riksbank) plans to launch a pilot version of the e-kron digital currency in 2019.

Sweden is one of the countries where cash is used minimally. According to the latest survey, the Riksbank only uses 13% of Swedish people to buy in stores.

Deposits at commercial banks are digital, but basements can also be borne by the government, such as cash now, Lagarde said.

Digital currencies can come in the form of state-owned currencies or through accounts held directly at the central bank.

Hidden as bitcoin and others, on the contrary, offer alternatives that are decentralized, which means they are not controlled by central authorities.

Lagarde said that the basement anchored in technology does not fully convince him. "Adequate regulation remains a pillar of trust," thought the IMF chairman.

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