International Monetary Fund (IMF): Bitcoin’s Rapid Development Of Poses New Financial Challenges
Christine Lagarde, the head of the International Monetary Fund (IMF) has recently affirmed that the world on the verge of a new financial crash like the one from the last decade. According to her, the increase in cybersecurity risk coming from the fast development of new financial technologies, which includes cryptocurrencies, is also a reminder that the permanent evolution of the technologies.
The World At Risk
Christine Lagarde has spoken about the risk of a new financial crisis before speaking at the IMF forthcoming annual meeting. According to her, the large challenge that looms at the global industry at the moment is to prevent a second Great Depression from happening.
For instance, she affirms that the International Monetary Fund is concerned with bank concentration and the rising lending by shadow banks in China. Another issue, according to her, is the laissez-faire approach on insurance companies and asset managers.
As the total value of global debt has hit an all-time high of $182 trillion USD, she affirms that this is dangerous because it represents a growth of 60% since the Great Recession of 2008. This way, developing world governments and firms remain vulnerable to the rise of interest rates that the U.S. Federal Reserve is doing right now.
According to Lagarde, the recent crisis faced by Argentina and Turkey are a sign of the issues that might extend for the rest of the world.
Lagarde has also talked about cryptocurrencies. According to her, the second chapter of the Global Financial Stability Report of the IMF advises people to remain attentive to all the risks involved with cryptocurrencies.
The main argument is that, despite all the benefits that the blockchain technology has, the technology is incredibly risky as it is still developing. Cybersecurity risks are the main issue with Bitcoin and other cryptos, which can harm the financial institutions that decide to use it.
She defends that these issues should remind people that the market is ever evolving and that being cautious is important, as well as regulators and supervisors needing to remain vigilant and act if things get out of control.
Christine Lagarde has an optimistic view of Bitcoin and cryptos. She defends that they can play a role in how people save, invest and pay their bills. In developing economies, especially, they can help to secure property rights and to increase the market confidence.
Unlike libertarians such as Roger Ver and John McAfee, though, Christine Lagarde defends the role of the central role in the management of the cryptocurrencies because they are too unstable otherwise.
Bitcoin, as many know, was born in the post-2008 era and had the support of technologists and libertarians but, since last year, the cryptocurrencies have become mainstream.