Digital currencies could coexist alongside traditional banks - IMF boss

Managing Director of the International Monetary Fund ( IMF) has said the growth of bitcoin and other digital currencies could make the global financial system safer.

Christine Lagarde said some tools built using the technology behind bitcoin, which are known collectively as crypto-assets, hold the potential to revolutionise the world of high finance by making it faster, cheaper and safer.

In a blogpost as politicians and central bankers gather in Washington for the IMF’s regular spring meetings, Lagarde said there was hope for a world where firms using digital currencies could coexist alongside traditional banks.

“In order for this to happen, we need to keep abreast of rapid market and technological developments. We must act quickly to bridge the knowledge gap that inhibits effective monitoring of crypto-assets, adding there should be systemic risk assessment and timely response policies, as well as measures to protect investors and market integrity’‘, Lagarde said.

The IMF is not the first institution to want to regulate Bitcoin and other digital currencies. The Bank of France and the Bank of England have already expressed their willingness to regulate the use of crypto-currencies.

Christine Lagarde has however previously warned over the risks posed by bitcoin and other digital currencies.