The head of the International Monetary Fund, Christine Lagarde, said there may be a role for central bank-issued cryptocurrencies.
In remarks prepared for an address to the Singapore Fintech Festival, the IMF managing director said that “various central banks around the world are seriously considering” state crypto including Canada, China, Sweden and Uruguay. “They are embracing change and new thinking, as indeed is the IMF,” she added.
That’s why “I believe we should consider the possibility to issue digital currency. There may be a role for the state to supply money to the digital economy,” she said. However, a state cryptocurrency must “satisfy public policy goals” including financial inclusion, security and consumer protection and providing privacy in payments.
Lagarde said the IMF just issued a report on the pros and cons of central bank digital currency that focuses on domestic, not cross-border effects of digital currency.
Back in April, in its Global Financial Stability Report, the IMF seemed more lukewarm on the idea of central bank-issued crypto, saying that while these assets create opportunities, their pricing is more volatile.
Some central banks are ready to dip their toes in the crypto water, however. In late October IBM and the Official Monetary and Financial Institutions Forum issued their own report that found 38 percent of 21 central banks surveyed are actively researching and conducting trials of wholesale central bank digital currencies as a replacement for government-issued fiat currencies. Wholesale CBDCs are money limited to commercial banks and clearing houses that make up the interbank market.
For her part, Janet Yellen, former head of the Federal Reserve said in a recent speech she opposes the U.S. central bank issuing cryptocurrency, saying it “could have negative impacts on financial stability.”