IMF chief wants central banks to issue digital currencies
Having central banks issue digital currency can bring about financial inclusivity, better security and consumer protection, as well as allay privacy concerns, managing director of the International Monetary Fund Christine Lagarde told an audience at the Singapore Fintech Festival at Singapore Expo yesterday.
By issuing digital currency, governments can also satisfy public policy goals that private companies are less motivated to achieve, she noted, pointing out that countries like Uruguay, China and Sweden are considering bringing in virtual currencies.
The state's role in regulating money has been changed by financial technology revolution.
"The fintech revolution questions... coins and commercial deposits, and it questions the role of the state in providing money," she said.
But millennials are reinventing how economies work.
Digital currencies, she said, are likely to become more convenient and integrated with social media, available for online and person-to-person use, including micro-payments.
"And of course, we expect it to be cheap and safe, protected against criminals and prying eyes," she added.
Ms Lagarde said if the majority of people in a country adopt digital forms of money, "the infrastructure for cash would deteriorate, leaving those in the periphery behind".
Calling on governments to take the lead, Ms Lagarde said central banks can allay concerns people may have about the rise of cryptocurrencies by issuing their own digital currency.
The more commonly traded cryptocurrencies include bitcoin, ethereum and dogecoin.
Private firms, she worries, may under-invest in security. Trust in digital currencies would be eroded in the event of a private system breakdown.
Ms Lagarde said that central banks can design digital currencies in which the users' identities are authenticated with due diligence procedures, and by transaction records.
She said central banks can work with private firms to come up with solutions that allow financial innovation to flourish.
The Singapore Fintech Festival ends tomorrow.
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