According to Christine Lagarde, the managing director of the International Monetary Fund (IMF), financial technologies such as virtual currencies and the blockchain are “shaking” the banking system. She added that such technologies have to be monitored to ensure stability.
Lagarde said this during an interview with CNBC yesterday. She noted that banks are changing their business models and this shows that technologies like virtual currencies have a big effect on the leading actors in the financial sector.
I think the role of the disruptors and anything that is using distributed ledger technology, whether you call it crypto, assets, currencies, or whatever … That is clearly shaking the system,
Lagarde said that such big changes in the economy must be followed by regulation. She added that the financial sector does not want technologies that would make a lot of changes in the economy as this would cause instability in the industry.
Lagarde further noted that big tech companies view the banking industry as a rich industry to disrupt. Consequently, all crypto and blockchain companies trying to enter the banking sector should be regulated, accountable, and fully trusted.
Traditional companies that have embraced disruptive technologies
Facebook announced in February that it seeks to create a fiat-pegged virtual currency in the first half of this year. A New York Times reporter recently revealed that the firm aims to raise $1 billion from VC firms. The firm would use the funds as collateral for its token.
Update on Facebook’s cryptocurrency: Sources tell me that Facebook is now looking to get VC firms to invest in the Facebook cryptocurrency project we reported on earlier this year. I hear they are targeting big sums — as much as $1b.
— Nathaniel Popper (@nathanielpopper) April 8, 2019
Apple recently announced that it had collaborated with Goldman Sachs to create ‘The Apple Card’. This is a no-fee credit card that would work hand-in-hand with the company’s mobile payment and digital wallet service called Apple Pay.
J.P Morgan Chase & Co
In an attempt to embrace the blockchain technology and virtual currencies, American investment bank J.P Morgan announced that it would be creating a fiat-pegged stablecoin named “JPM Coin.” According to J.P Morgan, this movement seeks to improve the process of settling payments between clients.
A Word of Caution
She, however, cautioned that this new and fresh tech is not as mature as the incumbents. According to her, crypto still has a long journey ahead. Previously, she has shared a sentiment that crypto is currently somewhere between a revolution and a fad. She warned,
We have to be mindful of two things: trust, and the stability of the system […] we don’t want innovation that would shake the system so much that we would lose the stability that is needed.
Do you think crypto will dethrone international banking? Let us know in the comments section below!
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