IMF’s La­garde: pol­i­cy­mak­ers should view crypto as­sets pos­i­tively too

The National - News - - BUSINESS - ALICE HAINE

Pol­i­cy­mak­ers should keep an open mind to­wards crypto as­sets and work to­wards an even-handed reg­u­la­tory frame­work that min­imises risks and al­lows cre­ativ­ity to flour­ish, In­ter­na­tional Mon­e­tary Fund man­ag­ing di­rec­tor Chris­tine La­garde said yes­ter­day.

In a blog posted on the IMF web­site, Ms La­garde out­lined “the prom­ise” that the 1,600 crypto as­sets cur­rently in cir­cu­la­tion can of­fer, and en­cour­aged reg­u­la­tors to view them in both a pos­i­tive and neg­a­tive light.

“A ju­di­cious look at crypto as­sets should lead us to nei­ther crypto-con­dem­na­tion nor crypto-eu­pho­ria,” said Ms La­garde. “Just as a few tech­nolo­gies that emerged from the dot-com era have trans­formed our lives, the crypto as­sets that sur­vive could have a sig­nif­i­cant im­pact on how we save, in­vest and pay our bills.”

But the IMF head said that be­fore crypto as­sets can trans­form fi­nan­cial ac­tiv­ity in a last­ing way, they must earn the con­fi­dence and sup­port of con­sumers and au­thor­i­ties.

“An im­por­tant ini­tial step will be to reach a con­sen­sus within the global reg­u­la­tory com­mu­nity on the role crypto as­sets should play. Be­cause crypto as­sets know no bound­aries, in­ter­na­tional co-op­er­a­tion will be es­sen­tial.” She said a con­sis­tent reg­u­la­tory ap­proach would help to pro­tect con­sumers and in­vestors. Her com­ments come as pol­i­cy­mak­ers look to draw up new rules around dig­i­tal coins to bet­ter reg­u­late the space. Rules can vary wildly by coun­try, given a lack of global co-or­di­na­tion among au­thor­i­ties. Ja­pan, for ex­am­ple, in­tro­duced a li­cens­ing sys­tem for dig­i­tal-as­set ex­changes last year, while Hong Kong has a more hands-off ap­proach, only warn­ing crypto plat­forms to avoid trad­ing any­thing that qual­i­fies as a se­cu­rity with­out per­mis­sion.

Ms La­garde said the po­ten­tial ben­e­fits of crypto as­sets in­clude their abil­ity to en­able fast and in­ex­pen­sive trans­ac­tions via the blockchain tech­nol­ogy, some­thing cen­tral banks could look to pro­vide if dig­i­tal forms of money re­main risky and un­sta­ble.

“The un­der­ly­ing tech­nol­ogy of crypto as­sets – dis­trib­uted ledger tech­nol­ogy, or DLT – could help fi­nan­cial mar­kets func­tion more ef­fi­ciently,” said Ms La­garde. “Self-ex­e­cut­ing and self-en­forc­ing ‘smart con­tracts’ could elim­i­nate the need for some in­ter­me­di­aries.”

A new re­port from Moody’s In­vestors Ser­vice, re­leased yes­ter­day, found that blockchain tech­nol­ogy had the po­ten­tial to sig­nif­i­cantly re­duce the costs and time in­volved in cross-bor­der bank­ing trans­ac­tions, in­creas­ing banks’ ef­fi­ciency. How­ever, those ef­fi­cien­cies could also put pres­sure on bank rev­enues.

“Blockchain has the po­ten­tial to sub­stan­tially change how a wide range of fi­nan­cial ser­vices are ex­e­cuted,” said Colin El­lis, Moody’s man­ag­ing di­rec­tor of credit strat­egy and the re­port’s co-author.

“But the adop­tion of these tech­nolo­gies will also limit pro­cess­ing fees, com­mis­sions and gains on for­eign ex­change trans­ac­tions, which will pres­sure rev­enue.”

Ms La­garde said blockchain tech­nol­ogy also of­fers se­cure and im­por­tant stor­age ca­pa­bil­i­ties for cer­tain in­dus­tries, such as health care, which could ben­e­fit from the tech­nol­ogy for med­i­cal data.

The for­mer French fi­nance min­is­ter stressed that the Fin­Tech rev­o­lu­tion will not elim­i­nate the need for tra­di­tional bro­kers and bankers. How­ever, the fi­nan­cial sys­tem could ben­e­fit from a bal­ance be­tween the two with “de­cen­tralised ap­pli­ca­tions spurred by crypto as­sets” lead­ing to a di­ver­si­fi­ca­tion of the fi­nan­cial land­scape.

AP

Peo­ple walk by an elec­tronic stock board of a se­cu­ri­ties firm in Tokyo yes­ter­day. Shares were mixed in Asia af­ter an up­beat start to the week, with Chi­nese bench­marks lead­ing the re­treat

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