Lagarde made her comments in an interview with CNBC on April 10, following a panel devoted to “Money and Payments in the Digital Age,” as part of the 2019 Spring Meetings of the World Bank Group and the IMF in Washington, D.C.
Contributors to the preceding panel, which Lagarde moderated, were co-founder and CEO of crypto finance firm Circle Jeremy Allaire, Sarah Youngwood — chief financial officer of Consumer & Community Banking at JPMorgan Chase — the European Central Bank’s (SCB) Benoît Cœuré, and governor of the Central Bank of Kenya (CBK) Patrick Njoroge.
Lagarde observed that financial disruptors are having a clear impact on incumbents and reshaping the system from within, pointing to JPMorgan Chase’s move to launch its own digital coin, as well as new ECB initiatives that aim to provide instant, virtually cost-free value transfers:
“I think the role of the disruptors and anything that uses distributed ledger technology, whether you call it crypto assets, currencies or whatever — and it’s far from the Bitcoins we used to talk about a year ago — that is clearly shaking the system.”
She further noted that the transformative potential of blockchain-based technologies and assets have been broady embraced by regulators and central banks, who she said recognize the positive effect new inventions can offer for the business model of commercial banks.
Nonetheless, Lagarde voiced a word of caution in regard to the bleeding edge of new finance, stating:
“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.”
As reported, Lagarde has previously characterized crypto as being somewhere in between a fad and a revolution, and said that crypto markets must be regulated by the same laws that apply to the traditional sector in order to protect consumers and safeguard systemic stability.
Lagarde has previously affirmed her belief that crypto regulation is both inevitable and necessary, yet she has equally advocated for the positive role that cryptocurrencies can play for driving deeper financial inclusion and offering an alternative to failing national currencies.
As early as 2017, Lagarde already proposed the IMF could take a cue from disruptors and potentially release its own digital asset in future.