Our Digital Future

• Author: Camilla Lund Andersen
• Position: Editor-in-Chief
• Pages: 2-2

2 FINANCE & DEVELOPMENT | June 2018

EDITOR'S LETTER

ON THE COVER

Money is something that holds its value over time, can be easily translated into prices,

and is widely accepted. Illustrator Michael Waraksa’s June 2018 cover depicts its

evolution. With digitalization, money may be entering a new era.

Stefan Ingves on

going cashless P.11

David Donaldson

prof‌iled P.36

Epidemics and

economics P.46

JUNE 2018

Money,

Transformed

The future of currency in a digital world

FINANCE & DEVELOPMENT

A Quarterly Publication of the

International Monetary Fund

Our Digital

Future

“MONEY MAKES THE world go around,” Liza Minnelli famously sang in the

movie Cabaret. Money has for centuries been central to human relationships.

Loss of faith in its value can result in economic and political instability, even

war. In the past few years, nancial technology—ntech for short—has

caught the world’s imagination by oering alternatives to traditional means

of payment. Will digitalization redene money? We explore the possible

consequences, good and bad.

Traditionally, money has always been an expression of sovereignty,

writes Harold James of Princeton University—e ven if states at times

failed spectacu larly to guarantee its value. Today, most experts agree that

so-called cr yptocurrencies do not possess all the core attr ibutes of money.

But they also believe t hat distributed ledger technology (which underpins

such assets) has the potentia l to transform payment services by removing

the need for an intermediar y. is would reduce the role of central banks

and weaken state authority over the money supply. Indeed, that was the

political motivation behind Bitcoin, the rst dec entralized digital cu rrency.

Swedish central bank governor Stefan Ingves points out that, at pres-

ent, only 13 percent of transactions in his countr y are settled with cash.

If banknotes and coins have had their day, then soon the public will no

longer have access to a state-gu aranteed means of payment. at is, unless

central bank s redene their role. One possibility would be for central bank s

to issue their own digita l tokens—a solution that would require ca reful

consideration of choices and policy trade-o s, says the IMF’s Dong He.

Worries about the misuse of nancial technology should be weighed

against its potentia l benets to society. IMF Managing Director Christine

Lagarde oers the following advice: “Above all, we must keep an open

mind about crypto assets and nancial technology more broadly, not

only because of the risks they pose, but also becau se of their potential to

improve our lives.”

CAMILLA LUND ANDERSEN, Editor-in-Chief

INTERNATIONAL MONETARY FUND

Advancing the

Frontiers of

Monetary Policy

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$30. English. ©2018. ISBN 978-1-48432-594-0. Stock# EFMPEA

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“The book is comprehensive, detailed, as well as very

EDITOR-IN-CHIEF:

Camilla Lund Andersen

MANAGING EDITOR:

Maureen Burke

SENIOR EDITOR:

Chris Wellisz

ASSISTANT EDITORS:

Eszter Balázs

Marie Boursiquot

Bruce Edwards

DIGITAL EDITOR:

ONLINE EDITOR:

PRODUCTION MANAGER:

COPY EDITOR:

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