Christine Lagarde, the first female to head the IMF, has held almost every minister post in the French political arena. She began her career in 1981 as an antitrust and labour law lawyer for Baker & McKenzie, a Chicago-based law firm. In the fast track, Lagarde was appointed Trade minister between 2005 and May 2007, the following years, her cabinet positions changed frequently as new governments came into power, before she finally took the helm at the IMF in June 2011.
Ever since Lagarde’s rise in French politics, she always favoured opening new markets to export French produce and promoted the implementation and use of new technology to simplify business protocols. It seems she is adhering to her earlier principals and adopting the use of blockchain technology, cryptocurrencies and crypto-assets.
However, it was not without considerable thought that she approved the use of crypto-assets. In her March entry of the IMF blog, titled “Addressing The Dark Side Of The Crypto World,” Lagarde raises the various points relating to the misuse of crypto-assets due to their decentralised nature. After much thought and better understanding the capabilities of the technology available the decision to endorse cryptocurrencies seemed inevitable.
In her latest IMF blog, released yesterday, Lagarde keeps a tone of caution about the supporting of crypto-assets in general. She compares the rise of thousands of cryptocurrencies to the dot-com bubble and states “it seems inevitable that many will not survive the process of creative destruction.” She does go on to express that those that did survive from the dot-com bubble have flourished and made a substantial impact on our daily lives.
Lagarde goes on to explain the benefits of adopting Blockchain technology and how it would improve current financial practices. Her first thoughts turned to efficiency and expense; it is far quicker to transfer funds abroad using distributed ledger technology (DLT). This may also eliminate the need for some intermediaries entirely, as self-executing “smart contracts” can be setup using DLT.
Furthermore, she argues that DLT will gradually expand the financial ecosystem to work alongside the current banking model. She also notices that crypto-assets do have the potential to grow quickly and could challenge the current business practices, but given its relatively small-foot print, it doesn’t pose a serious threat to financial stability.
Lagarde closes by stating that crypto-assets are yet to earn the confidence of consumers and authorities alike. A necessary first step would be to reach an agreement within the global regulatory community on the role and function of crypto-assets. Ultimately, she calls for an “even-handed” approach to crypto-assets and with 189 members in the IMF, she plays a key role in the development of crypto-assets.