Christine Lagarde, IMF managing director, has presented a report on digital currencies at the World Economic Forum in Davos. This is the first IMF document to describe virtual currencies regulation and policy implications.

The 42-page IMF staff discussion note “Virtual Currencies and Beyond: Initial Considerations” provides an overview of digital money and underlying blockchain technology from theoretical and historical, as well as from legal and economic perspectives, and offers some regulatory recommendations both for domestic and international use.

The report includes a table on policy responses to virtual currencies in 13 selected countries.

Presenting the paper, Christine Lagarde argued that virtual currencies and their underlying technologies “can provide faster and cheaper financial services, and can become a powerful tool for deepening financial inclusion in the developing world,” adding that the challenge consists in reaping those benefits while preventing illegal uses.

The recommendations provided in the report suggest working out a flexible regulatory approach instead of banning cryptocurrencies.

According to IMF, regulators should pay attention to the financial soundness of virtual currencies’ intermediaries. Due consideration should be given to the integration between the conventional financial system and digital currencies market. The options include total prohibition of interaction between financial institutions and the digital currencies market, a certain degree of integration, and full integration.

The paper highlights the fact that, since virtual currencies are rapidly developing, the future landscape is still unpredictable, so the situation requires regular monitoring and developing new approaches in constantly changing environment.





Maria Rudina