Christine Lagarde, managing director and chairwoman of the International Monetary Fund (IMF), encourages “exploration” for central bank digital currencies (CBDCs) at a time when the demand for cash is diminishing and the demand for digital money is on the rise. In a prepared speech for the Singapore Fintech Festival on Wednesday, Lagarde said:
“I believe we should consider the possibility to issue digital currency. There may be a role for the state to supply money to the digital economy.”
Various central banks around the world are “seriously” considering the issuance of digital currency, including Canada, China, Sweden and Uruguay, she said. “They are embracing change and new thinking – as indeed is the IMF.”
However, at the same time, the IMF has also again criticized the view that public cryptocurrencies offer an alternative to CBDCs.
In a new report, titled “Casting Light on Central Bank Digital Currency” and revealed Wednesday alongside Lagarde’s speech, the IMF said “cryptocurrencies are different along many dimensions and struggle to fully satisfy the functions of money, in part because of erratic valuations.”
“This setup would be good for users, bad for criminals, and better for the state, relative to cash. Of course, challenges remain. My goal, at this point, is to encourage exploration.”