In Q4 2018, the International Monetary Fund’s (IMF) Managing Director, Christine Lagarde gave a rousing speech at the Singapore Fintech Festival entitled ‘Winds of Change: The Case for New Digital Currency’. She stated that state-backed digital currencies could gain greater access to global populations, offer better security, privacy and consumer protections.
In fact, according to MIT Technology Review, 15 central banks are seriously studying the implications of issuing a state-backed digital currency for various reasons.
An IMF report ‘Casting Light on Central Bank Digital Currencies‘ noted three main reasons as to why a digital currency may be attractive to central banks. Firstly, that of financial inclusion: China, Senegal, Tunisia, Uruguay and three central banks in the Caribbean including: Bahamas, Curacao and St. Maarten and the Eastern Caribbean Central Bank are all interested in gaining greater access to their populations. Second, cost efficiency, noted by: China, Ecuador and Curacao and St. Maarten. Finally, the diminishing use of cash interests: Canada, China, Curacao and St. Maarten, Norway and Sweden.
While the original intentions of digital currency may be to circumvent government institutions the technology seems to be proving far too attractive to be kept to its roots.