The head of the IMF: the Rapid development of cryptocurrency — a threat for financial system
The head of the International monetary Fund Christine Lagarde said that the world stands on the brink of another financial crisis. According to her, the source of risk is the rapid development of financial technology such as digital currency, and this fact reminds us that the constant evolution of the financial system requires regulators vigilance and constant observation.
Speaking before the annual conference of the IMF, the head of the Fund said “the global economy is facing serious challenges, threatening a second great depression.” In particular, she said, the organization is concerned about the concentration of banks growth of lending by shadow banks in China and the policy of non-intervention in relation to insurance companies and funds managing assets in the trillions of dollars.
According to estimates Lagarde, world debt, including public sector and private businesses has reached a historic high of $182 trillion. representing a growth of 60% since the global economic crisis of 2008. Governments and companies of developing countries vulnerable to a rise in interest rates by the Federal reserve system of the United States, which can initiate the diversion of Finance. The crises of recent times in Argentina and Turkey may spread to other developing countries.
In the second Chapter of the IMF paper with the lengthy title “Report on global financial stability. Regulatory reform ten years after the global financial crisis: looking back, looking ahead”, the authors advise regulators to stay alert to the risks sources that include financial, technology and cybercrime. They write:
Despite the potential benefits of new technologies, we learn more about the risks associated with them. Increased risks in cybersecurity pose a threat to financial institutions, financial infrastructure and regulators. Innovation should serve as a reminder that the financial system is constantly evolving and that regulators and Supervisory authorities must remain attentive to this evolution and is ready to act if necessary.
Note that Christine Lagarde is optimistic about cryptocurrencies. In a personal blog the head of the IMF wrote that digital currencies “may play a role in how people save money, invest and pay bills”. Lagarde says:
In developing economies innovative technology can strengthen property rights protection, strengthen the confidence of market participants and to facilitate the investment process.
In contrast to libertarians such as Roger Ver and John McAfee, Christine Lagarde defended the role of Central banks in managing the currency and financial system. She writes:
If produced privately scriptactive will remain risky and volatile, there may be a request for the establishment of Central banks in digital forms of money.
On materials News BTC