Christine Lagarde, the Managing Director of the International Monetary Fund, IMF, has predicted a future in which Bitcoin and other virtual currencies revolutionizes the world's financial system.
The International Monetary Fund, IMF, has always maintained a positive outlook for Bitcoin and virtual currencies. In an early 2017 staff paper, IMF expressed optimism about Bitcoin's future and drummed support for the financial applications of its blockchain technology.
Several days ago at a Bank of England conference, IMF Managing Director, Christine Lagarde, maintained thisoptimism and added that cryptocurrencies could well be the future.
To her, it would be unwise for governments to dismiss cryptocurrencies, or regard them as having no future because, in the future, people might actually prefer virtual currencies to paper money.
Virtual currencies "might just give existing currencies and monetary policy a run for their money", she said.
She also predicted that economies facing debilitating inflation problems might resort to virtual currencies for succor.
"For instance, think of countries with weak institutions and unstable national currencies. Instead of adopting the currency of another country – such as the U.S. dollar – some of these economies might see a growing use of virtual currencies. Call it dollarization 2.0." she explained.
Already some citizens of Venezuela and Zimbabwe - countries battling hyperinflation, are storing values in cryptocurrencies so as not to lose their monies. The governments of these nations are still far from adopting crypto coins as a legal tender though.
Christine Lagarde, however, pointed out that Bitcoin and cryptocurrencies still have a way to go, and the crypto-revolution is still in the distant future because at the moment they are “too volatile, too risky, too energy intensive" and "the underlying technologies are not yet scalable.”
Nevertheless, the potential of cryptocurrencies cannot be ignored, and one day they might take over everything.
“Why might citizens hold virtual currencies rather than physical dollars, euros, or sterling? Because it may one day be easier and safer than obtaining paper bills, especially in remote regions,” Lagarde said. “Virtual currencies could actually become more stable.”
She then advised central banks all over the world to run "effective monetary policies while being open to fresh ideas and new demands, as economies evolve."
Lagarde expressed her predictions using a sci-fi portrayal of the world in 2040 when there would be individual flying drones and capable digital assistants. Her sentiments, however, resonate with the belief of other big-name optimists, like Fidelity CEO Abigail Johnson and the John McAfee, the founder of McAfee Associates.