SDR and Bitcoins: Competition or Cooperation?
Note no. 4, October 2017
Christine Lagarde - the IMF Managing Director - in her recent speech1 on the 20th anniversary of the Bank of England's independence, wondered whether virtual currencies - like the Bitcoin - pose a challenge to the current system of currencies and central banks.The answer is that, for the time being, this is not the case because virtual currencies are "too volatile, too risky, too energy intensive […] many are too opaque for regulators; and some have been hacked". Nonetheless there is a “growing demand for new payment services” in economies “rooted in peer-to-peer transactions, in frequent, small value payment, often cross border”: in these cases, virtual currencies can be competitive against traditional systems such as credit cards. [...]