The adaption and progress of Blockchain and cryptocurrencies have gained considerable momentum now which increases the responsibility of Global Organizations like the International Monetary Fund (IMF) to maintain the stability in world economics.
The potential of Blockchain and cryptocurrencies goes beyond the capabilities of Bitcoin. Currently, the Regulators and Central bank face not a single threat in the form of Bitcoin, but also the associated disruptive technology and the army of digital currencies that could change the current economic system of the world.
Incumbent Banks Face Blockchain Disrupters
The IMF Managing Director, Christine Lagarde recently affirmed that commercial banks have started to feel the heat and the need for innovation and transformation in the current Financial system. Not only Blockchain technology but cryptocurrencies are alone ‘disrupting’ the global finance sector.
Lagarde hinted that the ‘JPM coin,’ which was launched by Banking Giant JP Morgan and Co. in February 2019 is the proof that digital assets are seeping into the financial system. Moreover, she also expects that the limitations on the use of the JPM coin “to be scaled beyond institutional clients.”
Lagarde noted in an interview with the CNBC on Wednesday 10th April that,
“The voices that we heard which I thought were really interesting were those of the Regulators and central bank Governors.” She said that they accepted that “this is good and this is helpful and is changing the business model of commercial banks”
Facebook also hinted at its plan of releasing its cryptocurrency which would potentially enable transfer of value between billions of users worldwide. The digital assets and tokenized economy are “shaking the system” from its core.
The Central Bank of Kenya has granted a banking license to a Telecom Company. There are many Data and Information firms like Amazon and Google which can enter the space with their coin too. There are many other Crypto-Firms which are seeking regulatory approval from major Federal Institutions to promote the use of Blockchain and Cryptocurrencies.
Nevertheless, as a cautionary note and highlighting the responsibility of the IMF, she added that maintaining stability in the financial system is IMF’s prime focus and would not let unchecked innovation disrupt the system adversely.
“But we have to mindful of two things: trust and stability of the system.”
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