Lagarde calls on central banks to keep pace with the winds of change and issuing digital currencies

DUBAI (Reuters) - New winds are blowing on the world's economies of digitalization, with the millennium generation reinventing the way the economy works and holding their hands in their hands, said Christine Lagarde, director general of the International Monetary Fund.

"The money itself is changing and is expected to become more convenient and easy to use, and may become less serious," Lagarde said in a speech on Wednesday morning at the Singapore Financial Technology Festival.

It called for "the integration of money into social media, so that it can be easily used on the Internet and from one person to another, which includes micro payments, which will be cheap and safe, and protected from criminals and prying eyes."

The director of the International Monetary Fund (IMF) asked about the role of cash in this digital world, after the signs on the shop fronts began to say "no cash is accepted" and bank deposits began under the pressure of new forms of money.

She pointed to new payment providers who offer e-funds - such as AliPay, WeChat in China, PayTM in India and M-Pesa in Kenya - that offer money patterns designed on the basis of the digital economy in response to what people demand and what the economy requires.

Even encrypted currencies such as Bettkin, Atheros and Ripel are competing for a place in the money-free world, and are constantly reshaping themselves in a bid to provide more stable value and a faster and less costly settlement, according to the IMF director.

Lagarde also called on central banks to issue digital currencies, and that countries should fill the void that led to the gradual withdrawal of cash.

She wondered about the feasibility of central banks issuing a state-guaranteed digital currency, such as liquid cash, "with e-money providers seeing that they are less risky than banks because they do not lend money, deposit money in savings accounts and make payments simply within their own networks, While encrypted currencies seek to establish confidence in technology. "

She pointed out that many central banks around the world are seriously considering the application of these ideas, including Canada, China, Sweden and Uruguay, where the adoption of change and new thinking.

The first is financial inclusion, where the digital currency offers great potential, through its ability to reach individuals and businesses in remote and marginalized areas, while banks do not give much attention to serving the poor and those living in rural areas.

"The second advantage of the digital currency is security and consumer protection. Without cash, excessive power is concentrated in the hands of a few large private entities that provide payment services. Ultimately, monopolies are naturally dominated by payment services - the fewer the service providers Cost and benefit. "

The third objective is to maintain privacy. Liquid cash allows cash to be paid without the knowledge of the client. We use cash to protect our privacy for legitimate reasons, such as avoiding piracy or creating customer profiles, according to Lagarde.

However, Lagarde saw that "central banks are rushing to save the situation by subtracting a purely digital currency from the identity of the parties they deal with, because it will allow a richer mine for the criminals."

"The risks involved in relying on digital currencies are not financial integrity. Central banks have a digital currency that verifies the identity of their users and records transactions, but the identities of users remain unknown to third parties or governments, unless otherwise required by law. AML / CFT controls can operate in the background, and if there is suspicion of treatment, identity can be disclosed and investigations carried out. "

The IMF director also spoke of the risks of financial instability. "Digital currencies can aggravate pressure on bank deposits. If digital currencies are like commercial bank deposits enough, because they are very safe, can be acquired without limit, Value, and maybe even generate interest - what is the need for a bank account originally? ", As she put it.

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