IMF managing director Christine Lagarde thinks it’s unwise to dismiss virtual currencies. Just wait till it “grows up.”
The tug of (word) war on whether cryptocurrency is good or bad tightens as another industry heavyweight chimes in on the debate.
International Monetary Fund (IMF) managing director Christine Lagarde believes that despite the deficiencies and flaws of virtual currencies, they may, over time, surmount these challenges and give current currencies and monetary policy “a run for their money.”
“For now, virtual currencies such as Bitcoin pose little or no challenge to the existing order of fiat currencies and central banks. Why? Because they are too volatile, too risky, too energy intensive, and because the underlying technologies are not yet scalable. Many are too opaque for regulators, and some have been hacked,” she said at the Bank of England conference in London last Friday.
“But many of these are technological challenges that could be addressed over time. Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays. So I think it may not be wise to dismiss virtual currencies,” she added.
She reiterates the fact that the technology behind virtual currencies holds the answer to several deficiencies the current financial system has, especially as cross border transactions rise.
And to end the virtual currency part of her speech, she asks: “So, when the new service economy comes knocking on the Bank of England’s door, will you welcome it inside? Offer it tea—and financial liquidity?”
Her speech comes shortly after JPMorgan CEO Jamie Dimon’s seemingly uneducated tirade over Bitcoin being “a fraud,” adding that he’d fire any JPMorgan trader who was trading bitcoin “in a second” because “it’s against our rules and they are stupid.” A few days later, however, Swedish stock exchange Nordnet caught JPMorgan taking advantage of the price drop succeeding Dimon’s harangue by buying bitcoins by the bulk—they popped up on the top five largest bitcoin buyers on the exchange.