Managing Director of the International Monetary Fund ( IMF), Christine Lagarde, has written in her blogpost that the growth of bitcoin and other cryptocurrencies 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.
This has come as an unexpected boost for bitcoin.
Ms Lagarde wrote in a blogpost that cryptocurrencies like bitcoin could enable fast and inexpensive transactions, while the underlying blockchain technology could make financial markets safer.
Writing in a blogpost as politicians and central bankers gather in Washington for the IMF’s regular spring meetings, she said there was hope for a world where firms using digital currencies could coexist alongside traditional banks.
“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,”
Ms Lagarde repeated remarks she made to the Bank of England in 2017 that called for an even-handed approach to cryptocurrency regulation, with the hope exploiting the benefits while simultaneously minimising the risks.
“Before crypto-assets can transform financial activity in a meaningful and lasting way, they must earn the confidence and support of consumers and authorities,”
Ms Lagarde wrote.
“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 cooperation will be essential.”
The IMF is not the first institution to want to regulate Bitcoin and other cryptocurrencies. The Bank of France and the Bank of England have already revealed their intention to regulate the use of crypto-currencies.
The comments by Ms Lagarde are likely to add to the positive sentiment built around cryptocurrencies over the last couple of days, with some prominent Islamic scholars tagging bitcoin as halal investment. This could trigger another uptick in the market.