Cryptocurrency may have a surprise ally in International Monetary Fund head Christine Lagarde, who on Monday wrote that the technology behind Bitcoin holds the potential to revolutionize the world of high finance by making it faster, cheaper and safer. Is this a major step toward mainstream acceptance of cryptocurrency and blockchain technology?
As the reigning head of the International Monetary Fund (IMF), 62-year old Parisian Christine Lagarde is one of the most important and influential women on the planet. Formerly the holder of such high-ranking positions as Minister of Finance, Minister of Agriculture and Minister of Commerce within successive French governments, Lagarde – who speaks fluent English (in the 1980s she worked for a law firm in Chicago) was ranked the 5th most powerful woman in the world by Forbes magazine.
Clearly, Lagarde is someone whose words carry a lot of weight, and if she gives somebody or something her support, it means instant credibility. That’s why when this week she encouraged “open handling” of such a political hot-potatoe as cryptocurrency and blockchain technology, it was extremely significant and could help pave the way for mainstream acceptance and utilization of what is still highly divisive technology.
“Fight Fire With Fire”
Lagarde had previously stated in an earlier IMF blogpost which she posted last month that she believed that cryptocurrency’s own blockchain technology could be used to control it. She said that authorities across the globe could shackle the power and potential of cryptocurrencies and blockchain technology and bring them under control by “fighting fire with fire” and using said technology for that purpose. Lagarde warned that failure to do could result in the unopposed development of a “potentially major new vehicle for money laundering and the financing of terrorism”.
Miss Lagarde in currently on Washington, along with a host of high ranking politicians and bankers for the IMF’s regular spring meeting. Earlier today (Monday, April 16) Lagarde wrote a blogpost on the official IMF blog explaining her updated and significantly more positive views on cryptocurrency and blockchain technology, and her belief that such digital currencies and technology could coexist alongside traditional banks and traditional currencies. (Click here for Christine Lagarde’s complete blogpost.)
What Did Christine Lagarde Actually Say On Monday?
Lagarde now seems to have taken the position of almost embracing the technology behind Bitcoin, Ripple and Ethereum and stating that using it to its best advantages is the correct approach to take. This time around, Lagarde writes:
“A clear-eyed approach can help us harness the gains and avoid the pitfalls. Policymakers should keep an open mind and work toward an even-handed regulatory framework that minimizes risks while allowing the creative process to bear fruit.”
In less than a decade, cryptocurrency has exploded as both a market for extreme technological advance – particularly in the field of finance, as a potential cyber currency option, and a whole new sphere of investment. There now some 1,500 different digital currencies currently in circulation around the world, with a combined value that is estimated to be around $300 billion, with Bitcoin alone accounting almost half of that figure. With that in mind. Lagarde wrote:
“An objective look at cryptocurrency should not lead us to condemn it to a crypto-euphoria.”
Regarding the foreseeable advantages blockchain technology might bring, Lagarde focuses mainly on its use in fast and cost-effective transactions. Some payment services that have already adopted such technology in the form of a cryptocurrency such as Ripple or Litecoin have now made transfers across the globe in hours. It was in this area that Lagarde wrote most positively about crypto technology:
“In my opinion, the FinTech (Financial Technology) revolution will not make trustworthy intermediaries such as brokers or banks superfluous. Overall, there is hope that a more diversified financial landscape will be achieved with a better balance between centralized and decentralized services. This could create a financial system “that is more efficient and potentially more resilient to threats.”
In addition she points out, the processes are more transparent, which may also be of value in other areas such as healthcare. While privately issued cryptocurrencies remain risky and volatile, there may be a demand for central banks to create a digital form of money – an idea that the IMF intends to devote more attention to. She also stated that such new digital tools could have a significant impact on how people saved, invested or paid their bills, and politicians should take this into account:
“Therefore, politicians should be open-minded and work to create a fair regulatory framework that minimizes risks but leaves room for creative processes to come to fruition.”
All in all, Christine Lagarde’s IMF blog represents quite possibly the most sensible approach to cryptocurrency and blockchain technology yet laid down by such a major figure. It would seem to be an ideal blueprint of how blockchain technology should be used, absorbed, harnessed and accepted going forward, and cryptocurrency should be looked upon as something that to be embraced rather than ostracized.
Vive Christine Lagarde!