Christine Lagarde recommended central banks to develop their virtual currencies
"The change is the only constant," wrote the ancient Greek philosopher Heraclitus of Ephesus. This was the beginning of the speech given last week by Christine Lagarde, Director General of the International Monetary Fund (IMF), during the Pintek Festival in Singapore, which brought about the real change in technological matters in the financial markets of the future: the adoption and massive use of cryptocurrencies.
"In this new world, we have turned everywhere, at any time, a world in which the Millennials reinvent, in the hands of the cell phone, how our economy works, and that's the key: the money itself is changing. And easy to use, integrated with social networks, available for online use among people, including micropayments, "added the official who in a few days will be in Buenos Aires to attend the G-20.
Within this panorama where virtual currencies will occupy a much more important place, the role of the state will not cease to be fundamental. So much so, for Lagarde, central banks should begin to examine their current quiet against the type of financial asset that is gaining more and more space.
"Will central banks issue a new type of digital money? Token [unidad de valor, N.del R.] Backed by the state, or perhaps an account opened directly at the central bank, available for individuals and companies to make retail payments? "Asked the head of the IMF during the conversation.According to his vision, one might think of creating a formal cryptocur coin capable of ensuring a high level of security and protection for consumers, a very controversial aspect these days.
In this sense, Lagarde noted that there are already national monetary entities that have begun to evaluate the benefits of launching their virtual currencies. While China, Canada, Sweden and our brothers in Uruguay have already begun to think about what their cryptocrence may be, the first to see their full potential was Mark Carney, governor of the Bank of England (BoE).
Two years ago, Carney claimed that "bitcoin" was a "potential revolution" that he launched a start-up incubator on the block, the technology that provides security for the most successful virtual currency operation so far. But this view is not openly shared by his colleagues, which bitcoin and other cryptocurrencies can be a threat to their current global monopoly on monetary issue.
The question of a million that central banks have done in recent years is to know what their role might be in the future if the virtual currencies (which will be issued outside these institutions) occupy a privileged position on stock exchanges, in particular, as a means of payment.
To clarify all these doubts, Lagarde suggested that the central banks themselves take the plunge forward and go on the market to offer cryptocurrencies that enjoy the luxury, seriousness and support that only the national monetary bodies can offer. "I think we should consider the possibility of issuing digital currencies, perhaps the state can provide money to the digital economy.This currency can respond to public policy objectives, such as financial inclusion, security and consumer protection, and offer what the private sector is unable to provide: "He said during his speech. Speech
For official, cryptocurrency and blockchain technology has four significant advantages. First, they are fast and cheap, thanks to low costs and usually short delivery times. In addition, DLT technology ("distributed technology") and smart contracts will enable some brokers to switch efficiently. On the other hand, virtual currencies allow you to store very sensitive data safely.
And they guarantee the rights of users, thanks to transparent records.
This positive vision is conveyed by Lagarde and the IMF collides with those analysts and experts who warn of the risks of investment in cryptocurrencies. Because no one escapes the high risk that today we live speculative bubble in this market. Those who defend this point of view remember that the bitcoin multiplied its value by 100 in a little over two years.
Then its price reached a 50% collapse in just one month.
According to the famous guru Warren Butt, bitcoin is "poison to rats" based on speculation. "Creating a rise in price, thus creating more buyers.people like to speculate, they love to intervene," he warned. In addition to this huge volatility, we need to add to the controversy about the environmental impact of mining "cryptocurrencies": A Morgan Stanley report estimated that for every digital currency generated, the same amount of energy is consumed on average.
Nevertheless, Guard is optimistic: "The technology will change, and we have to do it, so we are not the last page on a dead branch, while others have already decided to fly with the wind."
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