‘’Blockchain is disrupting the banking space’’ says IMF Managing Director
The managing director of International Monetary Fund, Christine Lagarde believes blockchain innovators are shaking up the banking space according to her interview with the CNBC. Referring to the fintechs and blockchain projects as disruptors, Lagarde said they are having a clear ‘’impact on the incumbents’’ and therefor have to be regulated.
Referring to JPMorgan Chase’s venture into issuing its own stablecoin, despite Jamie Dimon having slammed bitcoin as a fraud in the past, Lagarde said the influence can be seen clearly. Similarly, Lagarde pointed to the European Central Bank’s TARGET Instant Payment Settlement (TIPS), the project launched last autumn, allowing European banks and individuals to transfer large sums of money.
“I think the role of the disruptors and anything that uses distributed ledger technology, whether you call it crypto assets, currencies or whatever, and it’s far from the Bitcoins we used to talk about a year ago, that is clearly shaking the system,” she said. However, Lagarde noted that these changes to the financial industry have to be accompanied by regulation, as ‘’shaking the system so much that we would lose the stability that is needed isn’t an optimal outcome. Lagarde added that tech companies entering the banking space must be subject to regulation, and that they ‘’will have to be held accountable so that they can be fully trusted’’ and that’s why she believes ‘’ We have to be mindful of two things: trust, and the stability of the system.’’
Lagarde has in the past urged central banks to ‘’consider launching digital currencies’’ so that they can keep up with the changing financial landscapes. The head of the IMF has also noted in that past that she believes cryptocurrency regulations are inevitable but, has argued these have a positive role in the financial system. She continued, these regulations are what will increase financial inclusion and offer people an alternative to national currencies.