Key figures at International Monetary Fund (IMF) have recently espoused pro-blockchain views with the IMF Managing Director believing in the public benefits of cryptocurrencies, and the Deputy Counsel discussing blockchain technology as part of ongoing future policy research.
Risk and reward
Earlier on in November, the Official Monetary and Financial Institutions Forum (OMFIF) published a bulletin in which IMF Managing Director Christine Lagarde authored an article titled ‘A Regulatory Approach to Fintech: Guarding Against Emerging Risks Without Stifling Innovation’. Highlighting the challenges facing cryptocurrencies, what opportunities they offer, as well as their downsides, she acknowledges the polarizing camps in which many position themselves with regards to the crypto-industry.
According to Lagarde, there are crypto-evangelicals who see the tech innovation as a “similar breakthrough” to the invention of the telephone, and its initial dismissal by the dominant market forces. She also acknowledges the opposing side who believe cryptocurrencies to be “a fad or a fraud”, and says that the new technology should not be dismissed “so lightly”.
Echoing the balanced statements she had made earlier this year, she continues to argue that in the wake of these new technologies, regulators will be challenged to protect consumers and investors from fraud, tackle tax evasion as well as money laundering and terrorism financing, while maintaining the “integrity and stability on the financial system”. But this must also be done carefully as not to stifle innovations that will benefit the public.
Conclusively, she wrote: “Above all, we must keep an open mind about crypto-assets and fintech, not only because of the risks they pose but also because of their potential to improve our lives. When in doubt, think of Bell and his telephone.”
“Anchored” by Blockchain
At the Singapore Fintech Festival on 12 November, IMF General Counsel Ross Leckow said during a discussion with Ripple CEO Brad Garlinghouse: “The IMF is devoting a lot of attention to fintech and blockchain.”
Giving focus to the demand for absolute regulatory certainty, Leckow described the global blockchain regulatory discussions as “early stage”, adding “a lot more work needs to be done”.
Leckow’s views fall in line with those of his colleague Lagarde; when questioned by Garlinghouse on the IMF’s views of digital assets, Leckow said:
“The IMF takes a balanced view. Each country has to decide for themselves what type of regulatory framework is best. But generally speaking, they should be cognizant of risk but also the potential to make the global system more efficient, more inclusive with this new technology.”
Marshall Islands
These open-minded statements may run somewhat in contrary to an ongoing issue regarding the Marshall Islands and their intentions to launch a national cryptocurrency.
It was reported on 12 September that the IMF had published a 58-page report warning against the plan to adopt a digital currency named Sovereign, citing international banking relations and the potential disruption to foreign aid as areas of concern.
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