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Managing Director of IMF, Christine Lagarde calls for strict monitoring of the developments in financial technologies and cryptocurrencies because they largely disrupt banking system. In an interview to CNBC, she said pressure from cryptocurrencies and financial technologies, commercial banks are changing their business models.

According to Lagarde, the disruptors like assets, crypto, currencies or other distributed ledger technologies are shaking the banking system. Various payment systems are being developed digital platforms. They are giving stiff competition to the fintech apps of a previous generation.

Popularity of wallets

The popularity of projects like crypto.com is on the rise. The transactions of Bitcoin (BTC) are estimated at 400 million. It is also noted that the use of wallets is increasing considerably. Digital currencies can no longer be treated as anonymous payments system. The projects involving digital currencies require KYC. They require strict enforcement of antimoney laundering.

Lagarde said “We don’t need innovation that destabilizes the banking system” during a meeting of the International Monetary Fund in Washington. She calls for imposing strict regulations on cryptocurrencies. Digital assets made way into the mainstream during the past few years. Meanwhile, the central banks are engaged in the digital currencies.

The Central Bank in Europe is of the opinion that slow moving Bitcoin cannot handle the huge volume of financial transactions. Moreover, Digital assets are not considered as legal currency in most of the jurisdictions worldwide. It is being treated either as securities or commodities.

Startups eyes banking sector for disruption

To expedite payments, the central bank is planning for modification of SWIFT internet banking system. The networks of Stellar and Ripple are being tested by few banks for inexpensive and faster interbank transfer. No control is imposed on the decentralized Bitcoin by the banks. The issue of digital tokens or coins depends on the use case and predetermined.

Tech giants like Apple Inc. (NASDAQ:AAPL) has introduced a credit card in alliance with Goldman Sachs in March 2019. Facebook, Inc. (NASDAQ:FB) is planning to launch cryptocurrency on its own. They feel that it is time to disrupt the multi-trillion dollar banking system. Banks are attempting to embrace the new technology. To facilitate settlement of payments instantly, JPMorgan is conducting a trial of JPM Coin.

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Steve Kanaval: Portfolio Manager/Writer/ Market Analyst Steve began his career in the Trading Pits in Chicago making markets at the Chicago Mercantile Exchange (NYSE:CME) the Chicago Board of Trade and the CBOE in the early 80’s. He ran the Morgan Stanley Derivative Prop Trading for the firm specializing in Index Arbitrage. He continued his career as a Trader/Portfolio Manager for multiple Hedge Funds during the Internet Boom of the 90’s managing large portfolios. Steve is known as an expert in MicroCap Technology Stocks and the emerging Digital Currency markets as a Portfolio Manager for his Family Office. Steve has managed portfolio’s in volatile asset classes for 3 decades as a commodity trader, hedge fund manager and digital currency trader and miner. Steve publishes his views on the asset classes in a public forum and has published more than 10,000 articles simplifying these complex and volatile assets for readers. His work is published on multiple sites including Bloomberg, Equities.com, Hacked.com, CryptoCurrencyNews as a paid contributor. His work includes research, journalism and archived video on important market volatility related to stocks, digital currency and other volatile misunderstood asset classes. He offers a humorous, unique insight and the related back stories and drivers for readers interested in volatility and emerging market assets. Full disclosure Steve is long 25 digital currencies and sits on the board of multiple public companies involved in digital currencies, and owns shares in these companies from time to time.

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