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The head of the International Monetary Fund (IMF), Christine Lagarde, told reporters today that cryptocurrencies should be closely monitored to maintain stability. She said that cryptocurrencies currently have a clear impact on the financial system and "shake" the banking sector.
Lagarde warned bankers and the rest of those working in financial services – watch crypto-currencies closely.
The IMF president, who has been in office since 2011, said the fundamentals of the system are now afloat and evolving rapidly. Although she does not necessarily oppose these innovations, she fears that such an innovation will cause widespread instability without proper regulatory oversight.
Banking operations are ripe for disruption
It's no secret that start-ups and tech giants are looking for a way to disrupt the multi-billion dollar banking sector. Since Apple released its own credit card last month and Facebook is thinking about publishing its own cryptocurrency, it's not hard to imagine how more businesses could start to grow with their own methods and native banking options.
The trend now seems to be that technology companies offering digital services are looking to have native payment systems. Technology companies are looking to keep everything in-house and in this system, Apple's iPhone users can use the credit provided by Apple itself, rather than through another bank.
The secret ingredient
How does blockchain integrate in all this? It depends on who you ask. For high-tech companies looking to enter the banking sector, they hope to be disruptive themselves – and reap all the rewards.
However, many of these same companies seem to overestimate their relevance and it is equally likely that the blockchain could eventually disrupt the technology companies themselves. Facebook's cryptocurrency could be a flop in the light of Bitcoin (BTC), for example. It can be argued that crypto-currencies or payment options related to a particular application or website are much less attractive than a global cryptocurrency that can be used anywhere and at any time.
This is the real disruptive element. Thus, when Lagarde speaks of the "disruptive" elements of the cryptocurrency sector, it is clear that she is talking mainly about the technology itself. substitute banking. It's ultimately her fear that she hopes to "settle" against.
Will crypto-currencies completely uproot the banking sector or will they be incorporated? Let us know your thoughts in the comments below.
Images courtesy of Shutterstock.
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