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Sunday 21 January 2018

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IMF chief: virtual currencies pose ‘little threat’

Written by Chris Lemmon
03/10/2017

Speaking at a Bank of England event in London, Christine Lagarde, managing director of the IMF, outlined her standpoint on the growing use of virtual currencies and artificial intelligence.

Lagarde stated that virtual currencies such as Bitcoin currently pose “little or no challenge to the existing order of fiat currencies and central banks”. This is because, according to the IMF chief, they are too volatile and energy intensive and because the underlying technologies are not yet scalable.

She does however open the door to wider adoption of virtual currencies in the future, stating that: “Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays. So I think it may not be wise to dismiss virtual currencies.”

Lagarde went on to explain that one day it may be easier and safer to use virtual currencies than their paper counterparts, especially in remote regions. “For instance, they could be issued one-for-one for dollars, or a stable basket of currencies. Issuance could be fully transparent, governed by a credible, pre-defined rule, an algorithm that can be monitored…or even a “smart rule” that might reflect changing macroeconomic circumstances.”

In her speech, Lagarde also notes the importance of artificial intelligence, claiming that it is “taking immense strides. Over the past year, some of the world’s best players of Go, the ancient board game, have lost to a self-learning computer. For many, that day of reckoning was supposed to be decades away. The machine learned tactics, recognized patterns, and optimized its game—better than we could.

“Clearly, the economy is vastly more complex than a game of Go. But over the next generation, machines will almost certainly play a larger role—in assisting policy-makers, offering real-time forecasts, spotting bubbles, and uncovering complex macro-financial links.”



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