IMF Head Foresees The End Of Banking As Bitcoin Surges Above $4400 | Zero Hedge
Description: "... the technology itself can replace national monies, conventional financial intermediation, and even puts a question mark on the fractional banking model we know today... So I think it may not be wise to dismiss virtual currencies."
Keywords: Zero Hedge,Zerohedge,Finance,Economics,Markets,Politics,Analysis,Bank of England,Bitcoin,Central Banks,China,fixed,International Monetary Fund,Monetary Policy,New Zealand
Date: 2013-01-07T00:00:00Z

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# IMF Head Foresees The End Of Banking As Bitcoin Surges Above $4400

by Tyler Durden
Oct 2, 2017 10:56 AM
0
SHARES

Authored by Jeffrey Tucker via The Foundation for Economic Education,

In a remarkably frank talk at a Bank of England conference, the Managing Director of the International Monetary Fund has speculated that Bitcoin and cryptocurrency have as much of a future as the Internet itself.

It could displace central banks, conventional banking, and challenge the monopoly of national monies.

Christine Lagarde–a Paris native who has held her position at the IMF since 2011–says the only substantial problems with existing cryptocurrency are fixable over time.

In the long run, the technology itself can replace national monies, conventional financial intermediation, and even "puts a question mark on the fractional banking model we know today."

In a lecture that chastised her colleagues for failing to embrace the future, she warned 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."

Here are the relevant parts of her paper:

> Let us start with virtual currencies. To be clear, this is not about digital payments in existing currencies—through Paypal and other “e-money” providers such as Alipay in China, or M-Pesa in Kenya.

> Virtual currencies are in a different category, because they provide their own unit of account and payment systems. These systems allow for peer-to-peer transactions without central clearinghouses, without central banks.

> For now, virtual currencies such as Bitcoin pose little or no challenge to the existing order of fiat currencies and central banks. Why? Because they are too volatile, too risky, too energy intensive, and because the underlying technologies are not yet scalable. Many are too opaque for regulators; and some have been hacked.

> But many of these are technological challenges that could be addressed over time. 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.

> Better value for money?

> For instance, think of countries with weak institutions and unstable national currencies. Instead of adopting the currency of another country—such as the U.S. dollar—some of these economies might see a growing use of virtual currencies. Call it dollarization 2.0.

> IMF experience shows that there is a tipping point beyond which coordination around a new currency is exponential. In the Seychelles, for example, dollarization jumped from 20 percent in 2006 to 60 percent in 2008.

> And yet, why might citizens hold virtual currencies rather than physical dollars, euros, or sterling? Because it may one day be easier and safer than obtaining paper bills, especially in remote regions. And because virtual currencies could actually become more stable.

> 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.

> So in many ways, virtual currencies might just give existing currencies and monetary policy a run for their money. The best response by central bankers is to continue running effective monetary policy, while being open to fresh ideas and new demands, as economies evolve.

> Better payment services?

> For example, consider the growing demand for new payment services in countries where the shared, decentralized service economy is taking off.

> This is an economy rooted in peer-to-peer transactions, in frequent, small-value payments, often across borders.

> Four dollars for gardening tips from a lady in New Zealand, three euros for an expert translation of a Japanese poem, and 80 pence for a virtual rendering of historic Fleet Street: these payments can be made with credit cards and other forms of e-money. But the charges are relatively high for small-value transactions, especially across borders.

> Instead, citizens may one day prefer virtual currencies, since they potentially offer the same cost and convenience as cash—no settlement risks, no clearing delays, no central registration, no intermediary to check accounts and identities. If privately issued virtual currencies remain risky and unstable, citizens may even call on central banks to provide digital forms of legal tender.

> So, when the new service economy comes knocking on the Bank of England’s door, will you welcome it inside? Offer it tea—and financial liquidity?

> New models of financial intermediation

> This brings us to the second leg of our pod journey—new models of financial intermediation.

> One possibility is the break-up, or unbundling, of banking services. In the future, we might keep minimal balances for payment services on electronic wallets.

> The remaining balances may be kept in mutual funds, or invested in peer-to-peer lending platforms with an edge in big data and artificial intelligence for automatic credit scoring.

> This is a world of six-month product development cycles and constant updates, primarily of software, with a huge premium on simple user-interfaces and trusted security. A world where data is king. A world of many new players without imposing branch offices.

> Some would argue that this puts a question mark on the fractional banking model we know today, if there are fewer bank deposits and money flows into the economy through new channels.

> How would monetary policy be set in this context?

> Today’s central banks typically affect asset prices through primary dealers, or big banks, to which they provide liquidity at fixed prices—so-called open-market operations. But if these banks were to become less relevant in the new financial world, and demand for central bank balances were to diminish, could monetary policy transmission remain as effective?

- China
- New Zealand
- International Monetary Fund
- Bank of England
- Monetary Policy
- Central Banks
- fixed
- Bitcoin

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Sir SpeaksALot Oct 2, 2017 10:58 AM

I wonder what cryptos does she have.

YUNOSELL Sir SpeaksALot Oct 2, 2017 11:00 AM

"It's a trap" says the guy from Star Wars whose face looks like a vagina

Rubicon YUNOSELL Oct 2, 2017 11:01 AM

Of course she says that... it is their get out clause and their future. Bitch.

VD Rubicon Oct 2, 2017 11:26 AM

naive crypt0-muppetz unable to comprehend the IMF's endgame in their SDRcoin more at SDRcon. props to Deep State for suckering so many "crypt0-'anarchists'".

hint: in the end there will not be any "coins"; but, rather, units of SDR.

Took Red Pill VD Oct 2, 2017 11:29 AM

Head of IMF, another job Hillary wanted but didn't get;

http://www.telegraph.co.uk/news/worldnews/northamerica/usa/8567112/Hilla...

old naughty VD Oct 2, 2017 12:41 PM

sounds like race to get Fed-coin is on.

OverTheHedge Rubicon Oct 2, 2017 11:25 AM

".....could be issued one-for-one for dollars, or a stable basket of currencies"

SDR perhaps? New world currency perhaps? Looking to reinvent themselves, with the IMF and the BIS at the forefront (i.e. head of the queue for the trough).

VD OverTheHedge Oct 2, 2017 11:27 AM

absolutely correct. see my above. this IMF gambit also removes all cash from equation, and hence everything is perfectly tracked.

Ghost of PartysOver VD Oct 2, 2017 11:46 AM

Exactly! For all the countries that want to shitcan paper currency and coin this is their way to achieve it. Next up will be some government agency, either sovereign or international will dictate the rules and if the sheeple don't like it then a kill switch will be activated. This could easily turn out to be Big Brother on steroids.

Oracle of Kypseli Ghost of PartysOver Oct 2, 2017 11:56 AM

She forgot to mention how easy it will be to tax every transaction that involves gain.

Shlomo Scheckelstein Rubicon Oct 2, 2017 11:27 AM

Remember the economist magazine 01/9/88, Vol. 306, pp 9-10

https://socioecohistory.wordpress.com/2014/07/26/flashback-1988-get-read...

it's all planned and crypto was/is a deep state project

http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsa...

VD Shlomo Scheckelstein Oct 2, 2017 11:28 AM

precisely. the SDR pre-dates that 88 economist article. btw the Rothschild family are class-a shareholders in the economist as per their masthead. the irony of ironies. in plain sight.

Shlomo Scheckelstein VD Oct 2, 2017 11:35 AM

...And we are already heavily invested in this technology hehehe let the shekels flow in..

The goyim don't know what's good for them, so let us control it and it will be all fine...hehhe trust us

Cash2Riches Sir SpeaksALot Oct 2, 2017 11:26 AM

The power that cryptos possess cannot be denied. Just like gold and silver, they have the elites scared to death, as they know that it will result in them losing control over their greatest form of power, the fiat money system. They cannot and will not allow it to succeed without a fight.

DoctorFix Cash2Riches Oct 2, 2017 11:41 AM

I don't know why they'd need to be afraid of anything. It's much like Obamacare... designed from the beginning to usher in something far worse. It's a global financial "head fake" and then you'll be fucked. The game is rigged and they're running the show much like a D&D dungeon master.

Scuba Steve DoctorFix Oct 2, 2017 12:10 PM

Dont let them have the GUNS, Dont let them have the GUNS .... be smart people.

It all comes down to that, its the only way they have a chance to have total control.

Barter and PM's can be alter-economy even if they go crypto BUT if you let them take the GUNS its all over but the shouting. Local clans can control their small barter economies off the books as long they can defend that right.

Forget the courts, they went out with the Hoola-Hoop.

Truly Inspiration Sir SpeaksALot Oct 2, 2017 11:34 AM

ETH and XRP as a minimum ;-)

BTC will be replaced in the future - too slow

Hyjinx Truly Inspiration Oct 2, 2017 12:07 PM

You forgot NEM/XEM. Probably the best blockchain out there.

YUNOSELL Oct 2, 2017 11:08 AM

"It's a trap" says the guy from Star Wars whose face looks like a vagina

tmosley Oct 2, 2017 10:58 AM

And so the first dinosaur looks to the sky and realizes it is fucked.

ParkAveFlasher tmosley Oct 2, 2017 11:04 AM

LaGarde is on your team. Ruminate on THAT

Raffie ParkAveFlasher Oct 2, 2017 11:11 AM

they all been into gold/silver much longer so Ruminate on THAT.

tmosley ParkAveFlasher Oct 2, 2017 11:12 AM

How is her recognition that the technology is probably going to put her out of a job putting her on my "team"?

Raffie tmosley Oct 2, 2017 11:15 AM

They are desperatly grabbing at straws is all.

In a nutshell, anyone who is bad that gets involved with cryptos means cryptos are bad reguardless of who owns and does what to any and all gold/silver. Because gold/silver are real money that only honest trusting people use.

dasein211 Raffie Oct 2, 2017 11:49 AM

It's at this moment when the T-Rex looked at the sky and with both arms in the air cried "Save me Jesus!"

ali-ali-al-qomfri tmosley Oct 2, 2017 11:59 AM

You ungrateful wanker,

you've been defending if not promoting _itcoin (I'm not going to say _itcoin)

and now you get the IMF nod and you are complaining?

She's on your team, how proud can you be? ;)

RedDwarf ParkAveFlasher Oct 2, 2017 11:44 AM

"LaGarde is on your team. Ruminate on THAT"

Hitler believed the world was round. You believe the world is round (I presume). Hitler is on your team. Ruminate on THAT.

Scuba Steve RedDwarf Oct 2, 2017 12:12 PM

Well, Hitler was right .....

RedBaron616 ParkAveFlasher Oct 2, 2017 12:18 PM

Funny, everything the IMF touches or endorses turn to rubbish. Suddenly, they are brilliant.

You are on the money.

And anyone who believes they will escape the taxman through Bitcoin doesn't understand the IRS. The wheels of government grind slowly, but they grind exceedingly fine.

malek tmosley Oct 2, 2017 11:31 AM

She told you exactly what you wanted to hear...

BlindMonkey malek Oct 2, 2017 11:40 AM

I have it on good authority that 'fonestar' was in fact Christine the whole time!!!!

/s

Mementoil tmosley Oct 2, 2017 12:28 PM

Nope.
If the IMF is interested in Crypto-currencies, it is only in order to seize control over them and assimilate them into the government / CB complex.
This is not good news for the common people.

LawsofPhysics Oct 2, 2017 11:00 AM

LOL!!!! Traditional "banking" died a long time ago with the REQUIREMENT FOR REAL COLLATERAL FOR NEW MONEY CREATION!!!!!

fuck 'em...

"Full Faith and Credit"

...now, fuck you, pay me with something real!

YUNOSELL LawsofPhysics Oct 2, 2017 11:03 AM

I like you and I like your posts. The Laws of Physics is the perfect username for you. People can pretend the laws don't apply for so long, but eventually they always come back . Peace brother!

LawsofPhysics YUNOSELL Oct 2, 2017 11:05 AM

cryptos have been an inflation hedge for some time. However, they are still a paper/digital hedge and not without risk. Unlike physical assets and productive capacity that you physical own and control.

Interesting times indeed.

CJgipper LawsofPhysics Oct 2, 2017 11:10 AM

I think the appropriate comment on this kind of point is, as always "The proper allocation to cryptos is not zero. The proper allocation to PM is not zero. The proper allocation to productive assets is not zero."

LawsofPhysics CJgipper Oct 2, 2017 11:17 AM

ALL fiat (including cryptos) will fail. Productive capital/assets and the people who control it will simply start producing for their own survival and protect themselves by any means necessary. Humanity has been here before where fraud is the status quo. Nothing new under the sun, but my tribe and I are prepared and doing fine. People still like to eat, especially good food.

same as it ever was.

malek LawsofPhysics Oct 2, 2017 11:34 AM

Oh that's OK,
tmosley simply redefines "fiat" so cryptos are not such.

HumanBrain CJgipper Oct 2, 2017 12:35 PM

Can't argue with that.

NoDebt Oct 2, 2017 11:01 AM

"the technology itself can replace national monies, conventional financial intermediation, and even "puts a question mark on the fractional banking model we know today."

Sounds like a banker's declaration of war against crypto to me.

LawsofPhysics NoDebt Oct 2, 2017 11:03 AM

well, I guess that depends on how one purchases cryptos, last I looked you still do that with fractional reserve fiat.

"Full Faith and Credit"

same as it ever was...

FreeShitter NoDebt Oct 2, 2017 11:03 AM

Fuck um. thats what atomic swaps and decentralized exhanges are for. These old bankster fucks wil become obsolete.

Bay of Pigs NoDebt Oct 2, 2017 11:06 AM

Or crash the system and FORCE humanity into a crypto only world?

The war on physical cash has been real and intensifying for years.

buzzsaw99 Oct 2, 2017 11:03 AM

bitcoin is infinitely divisible so it is no different than clownbux.

tmosley buzzsaw99 Oct 2, 2017 11:14 AM

How can you have lived this long being so stupid?

To you have a handler that keeps your from drowning when it rains?

buzzsaw99 tmosley Oct 2, 2017 11:25 AM

Arnold Poindexter: So what you're saying essentially is, is that along with infinite space which extends beyond perpetual bigness there's also infinite smallness?

Harold Wormser: [nods head in agreement]

Arnold Poindexter: How?

Harold Wormser: Easy. Take an asymptotic line and extend it outward.

Arnold Poindexter: Oh.

Stewart: Right, right, right. So perpetual bigness exists simultaneously with perpetual smallness. What was I thinking?

Ogre: What if uh C-A-T really spelled dog?

Arnold Poindexter: Wow.

Harold Wormser: God.

Stewart: Yeah.

Arnold Poindexter: That's heavy Ogre. Dog.

HumanBrain buzzsaw99 Oct 2, 2017 12:42 PM

An ounce of gold theoretically can be divided down to the individual molecule's but an ounce still goes for $1300 USD. Division doesnt de value. Take your bitcoin market cap and divide buy the number of bitcoins and get your price, its as simple as it gets. Divisibility has no relation to price discovery, only utility which is part of bitcoins intrinsic value.

woody3405 Oct 2, 2017 11:03 AM

Perfect reason for the ruling class to create EMP warfare to bring down the grid and destroy all electronics.

I wonder if any banks are stocking up on gold?

gregga777 woody3405 Oct 2, 2017 11:11 AM

I think that the Thermodynamic Oil Collapse will take care of cryptocurrencies without requiring an EMP event.

Dogman57 Oct 2, 2017 11:03 AM

she doesn't look so orange...maybe she is ill?

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