Christine Lagarde, head of the IMF, warns central bankers that bitcoin is rising. She has told them not to discount digital currencies, because they are gaining more adoption and traction. Lagarde addressed this issue in a conference Friday in London. She said digital currencies might give existing currencies “a run for their money.”
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An ABC News article quoted her: “In many ways, virtual currencies might just give existing currencies and monetary policy a run for their money. The best response by central bankers is to continue running effective monetary policy, while being open to fresh ideas and new demands, as economies evolve.”
Digital Currencies are Still in Their Infancy
Lagarde went on to say that digital currencies will not replace the current currencies anytime soon. She believes bitcoin is still too volatile. This is why many institutional investors are still waiting on the sidelines. However, the time will come when they decide to jump in.
“For now, Lagarde said, digital currencies are unlikely to replace traditional ones, as they are ‘too volatile, too risky, too energy intensive and because the underlying technologies are not yet scalable.’”
She also mentioned that high profile cases of exchange hacks, like the Mt Gox debacle, has caused mainstream investors to be wary of big investments into the space.
Technical Innovations Will Push Bitcoin Into the Limelight
Nonetheless, Lagarde said there will inevitably and undoubtedly be more technical innovation. These digital currencies will continue to grow and thrive. She said, just like the internet, cryptocurrencies will scale and quickly slither their way into the mainstream consciousness. In other words, central bankers should not ignore the technology or underestimate it. The ABC news article quoted her:
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.
Furthermore, Lagarde believes computers will be able to assist governments and other organizations. They will be able to set policies, perform bureaucratic tasks, spot bubbles, and manage other aspects of the financial system.
Mainstream Awareness and Other Perspectives
From the mainstream perspective, Lagarde represents a growing number of influential people who recognize the power of bitcoin and blockchain. However, there are still those who disagree or believe bitcoin is bound to break. People like Jamie Dimon and Jordan Belfort recently called bitcoin a fraud. Not to mention, China recently banned ICOs and acted to ban some bitcoin exchanges.
However, these comments and actions did not harm bitcoin. For every negative comment or publicity, there are positive comments and activities. For instance, Japan recently endorsed 11 exchanges and became Asia’s dominant bitcoin hub. The love of bitcoin and cryptocurrency seems to be accelerating at a greater pace despite significant push back.
Do you think the central bankers will respond to Lagarde? Will the mainstream fully embrace bitcoin soon? Let us know what you think in the comments below.
Images via Shutterstock, Marieclaire.fr (cover photo), and Forbes
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