Central banks need to think about digital currency because we are at a time of change in money, believes Christine Lagard, head of the International Monetary Fund (IMF).
Lagarda spoke on November 14 at the Fintech festival in Singapore. He highlighted the fluctuating nature of money and pointed out that demand for cash is now declining. According to him, central banks play a role in giving money to the digital economy.
"I think we should consider issuing digital currency," Lagarde said. The digital currency issued by the central bank can help increase financial reception and pay as a cheap and effective alternative to paper money.
Lagard also warned about the risks of cryptomas. "I just want to say that even if the arguments supporting cryptomain are not universal, we have to look seriously, carefully and creatively."
Changing the traditional task
Centralized banks around the globe discover how the growth of cashless payments affects the traditional role of money moving and the management of money supply. Lagarda warned that China, Canada, Sweden and Uruguay's central banks have taken this change and are trying to think about how to offer digital currencies to the public.
For example, the Swedish central bank (Riksbank) is planning an experimental version of e-kron digital currency in 2019. Sweden is one of the countries where cash is minimally used. According to the latest survey, only 13% of Swiss banks buy the shop.
Deposits in commercial banks are already digital, but the crypt is covered by the government as current cash, Lagarde said. Digital currencies are available through state-owned currencies or directly through an account with a central bank.
Bitcoins and others are disguised, on the contrary, they offer decentralized alternatives, so they are not controlled by a central authority either. Lagarde said that the crypts of confidence in technology could not fully convince. "Appropriate regulation remains a pillar of confidence," says the head of the IMF.