The head of the International Monetary Fund, Christine Lagarde thinks that cryptocurrencies like Bitcoin are disrupting the banking systems.She even added that to maintain stability, both in the crypto-space and the financial ecosystems, digital assets will have to start being monitored.
She thinks that virtual currencies are forcing the commercial banks not only to amend their business models but to make them rethink the entire systems. Speaking to CNBC, she added:
“I think the role of the disruptors and anything that is using distributed ledger technology, whether you call it crypto, assets, currencies, or whatever … that is clearly shaking the system. We don’t want innovation that would shake the system so much that we would lose the stability that is needed,” she said.
Introducing the topic “Money and Payments in the Digital Age”, Lagarde said it was agreed that cash usage was decreasing in many countries, citing Sweden where now only 13 percent of transactions were still being done using cash. In the US, about 22 percent of transactions are done still using cash and about double that for China.
Sticking to the same topic, she added:
“The role of banks as providers of payment services is being challenged and banks are going to have to adapt to survive or possibly disappear. Central banks are going to be in a tough place because they are going to have to decide what they do, cash, no cash? Central bank digital currency or not, maybe.”
Although critical of she assures that banks still play a central part in the financial systems. She adds:
“I am quite convinced that banks will stay. They are all here to stay because we are in an eco-system and we need competition. So it is the spur of competition and the spur of innovation that will help all of us work better and reap the benefits of this innovation.”
Recent reports suggest that G20 member countries are going to discuss international cryptocurrency Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) regulation at the Finance Minister and Central Bank Governors meeting on June 8 and 9 in Fukuoka, Japan.