IMF chief sees case for central bank digital currency

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From left: Malaysia's Prime Minister Mahathir Mohamad, Myanmar State Counsellor Aung San Suu Kyi, Vietnam's Prime Minister Nguyen Xuan Phuc, International Monetary Fund (IMF) chief Christine Lagarde, Canada's Prime Minister Justin Trudeau, Singapore's Prime Minister Lee Hsien Loong, Chile President Sebastian Pinera, Thai Prime Minister Prayut Chan-O-Cha, Brunei Sultan Hassanal Bolkiah, Cambodian Prime Minister Hun Sen and Indonesia's President Joko Widodo pose for a group photo before the start a working lunch on the sidelines of the 33rd Association of Southeast Asian Nations (ASEAN) summit in Singapore on Nov. 14, 2018. — AFP

SINGAPORE —

With growing innovation in the financial sector and a move towards a cash-less society, there is a role for central banks to enter the world of digital currencies, IMF chief Christine Lagarde said Wednesday.

Unlike private currencies like bitcoin and ethereum, money created by central banks would be regulated and trustworthy, and could reach all sectors of society, Lagarde said in a speech prepared for the Singapore Fintech Festival.

“The key is to harness the benefits while managing the risks,” Lagarde said. “Proper regulation of these entities will remain a pillar of trust.”

However, while central banks in several countries are considering e-money, questions remain about whether it makes sense for every country.

There “may be a role for the state to supply money to the digital economy,” and she noted that Canada, China, Sweden and Uruguay were “seriously considering” issuing digital currency.

An official e-money would have the advantage of fulfilling policy goals including financial inclusion, security and consumer protection.

“My message is that while the case for digital currency is not universal, we should investigate it further, seriously, carefully and creatively,” she said.

The IMF issued a report on Wednesday examining the issues central banks would face if they decided to issue electronic money. — AFP


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