Singapore is often a central spot for cryptocurrency related conventions and to found related businesses. The government of Singapore has continually shown a progressive stance on the technology to reap the financial, cultural and educational benefits. The annual Fintech Festival took place last week in Singapore where the International Monetary Fund was represented by Managing Director Christine Lagarde
Still Seeing Problems
In congruence with the most recent report on cryptocurrencies released by the IMF, Christine Lagarde focused on the problems with cryptocurrencies, rather than on the work being done to overcome the obstacles. Their primary concern is the potential of a Central Bank issued digital currency (CBDC). This type of financial instrument would become the closest thing to a legitimized global currency. Bitcoin and any other public, P2P cryptocurrencies are already functioning as global currencies, but without official government recognition.
The primary reason cited that this could never happen on a major scale is,“for political reasons,” she said. They see this as a direct liability against a central bank. However, they do still note that a CBDC seems like the eventual next step in the evolution of human currency.
“Although the technology [DLT] is evolving, it currently falls short in scalability, energy efficiency, and payment finality. DLT could be used over a closed (“permissioned”) network managed by the central bank. But there are other types of centralized settlement technology that may prove more efficient.”
And in an extremely positive light for cryptocurrencies, the related illicit activies of money laundering and illegal substance purchases were not covered. But rather, more focus was placed on another widely considered issue - volatility of cryptocurrencies where the issue directly affects our ability to considering them a “currency” in the traditional sense:
“[Cryptocurrencies] struggle to fully satisfy the functions of money, in part because of erratic valuations.” In a footnote, the report said that as for stablecoins, there are “doubts about the ability to maintain a peg, short of full backing by fiat currency.” - Christine Lagarde
By: BGN Editorial Staff