Embrace the blowing wind of digitization, Central Banks advised

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IMF Managing Director, Christine Lagarde. PHOTO/COURTESY: Claremont Mckenna College.

Central Banks should embrace digital currency as the role of cash in the current tech savvy world is changing, International Monetary Fund head Christine Lagarde has said.

According to Ms. Lagarde, the demand for cash is gradually decreasing and the payment method will not be in use a few years down the line.

“What role will remain for cash in this digital world? Already signs in store windows read “cash not accepted.” Not just in Scandinavia, the poster child of a cashless world. In various other countries too, demand for cash is decreasing. And in ten, twenty, thirty years, who will still be exchanging pieces of paper?” Ms. Lagarde said in a statement during this months’ Singapore Fintech Festival.

I believe we should consider the possibility to issue digital currency. Digital currency offers great promise, through its ability to reach people and businesses in remote and marginalized regions.”

Consequently, Ms. Lagarde insisted that financial inclusion, security and privacy would be achieved by taking up digital currency which is being considered by Central Banks in Canada, China, Sweden and Uruguay.

“The advantage is clear, your payment would be immediate, safe, cheap and potentially semi-anonymous and Central Banks would remain a sure footing in payments,” the IMF boss explained.

Despite the vast advantages digital currency has, Ms. Lagarde also highlighted the potential downsides of the payment method.

“The obvious ones are risks to financial integrity and financial stability. But I would also like to highlight risks of stifling innovation,” the IMF boss said.

However, the IMF boss insisted that if handled correctly, the downsides of digital currency can be overcome.

“While the case for digital currency is not universal, we should investigate it further, seriously, carefully, and creatively,” the IMF head said.

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