Head of International Monetary Fund (IMF) Praises Bitcoin’s Presence, Touts Crypto Payments Benefits

In an article by the Official Monetary and Financial Institutions Forum, Christine Lagarde, the IMF Chief discussed fintech. The article touches on the challenges, benefits, and disadvantage of using crypto.

According to the article, some claim crypto could lead to a major breakthrough. However, others dismiss it as a fad. However, she is of the opinion that it should not be dismissed.

Fintech Has Risks and Benefits

Lagarde believes that fintech offers a major promise but it has its risks. For instance, the distributed ledger could ensure transactions are faster and cheaper. It would also ensure that records are secure. It could ensure fewer delays due to the smart contract technology. However, it does come with its risks.

The Freedom to Innovate and Regulation

Regulators have a major challenge ahead according to Lagarde’s article. On one hand, they have a duty to stop tax evasion and fraud. They also need to protect the stability of the financial world. However, they do not want to impede innovation. By engaging market participants, regulators can discover the risk and benefits of the technology.

Thus, the regulatory framework needs to be flexible and creative. Thus far, authorities globally have reacted with various levels of stringency. If this continues, most activity will simply move to areas where regulation is light. Thus, it will be a race to the bottom. This means there needs to be a global effort to regulate crypto.

Lessons of the 2008 Financial Crisis

Lagarde explained the lessons learned from the financial crisis of 2008.

• Trust is at the Heart of the Financial System

Trust is crucial to the financial system but it is fragile. According to the article, risk can accumulate in unexpected ways. The years preceding the crisis saw the creation of instruments that were not well understood by investors. Thus far, it is not clear if a decentralized system would be less or more stable.

In a connected world, shocks in one place quickly spread around the world. A response to a crisis needs a coordinated effort. However, in a global system, the shock spreads much faster.

• Crypto Assets are not a Threat to Stability

The head of the IMF said that there is already a task force giving guidance on how to handle money laundering via crypto. Besides that, the Financial Stability Board is looking into ways to monitor crypto. She stated that the G20 agreed with the IMF that crypto was not a threat to the financial system. However, that might change in future.

• Action Needed

A new approach to regulation is needed. It is not prudent to wait until answers are clear to take action. Instead, regulation should start being considered not for the future. One method is the creation of sandboxed where the fintechs are tested in a monitored environment.


Lagarde concluded by saying that there needs to be an open-minded approach to crypto and fintechs. She finished her article by giving the example of Bell and the telephone.

Get Daily Headlines

Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

What to Know More?

Join Our Telegram Group to Receive Live Updates on The Latest Blockchain & Crypto News From Your Favorite Projects

Join Our Telegram

Stay Up to Date!

Join us on Twitter to Get The Latest Trading Signals, Blockchain News, and Daily Communication with Crypto Users!

Join Our Twitter

Add comment

E-mail is already registered on the site. Please use the Login form or enter another.

You entered an incorrect username or password

Sorry, you must be logged in to post a comment.
Bitcoin Exchange Guide