Christine Lagarde heads the IMF (International Monetary Fund). That position gives Mrs. Lagarde a privileged view on how the world’s new financial system will develop. Some significant changes are coming, and the IMF, alongside the central banks, will play an even more prominent role in the future. It’s going to be global banks for a global world. Does that imply a global currency? And does Ripple’s XRP fit there?
In this article, we will review briefly some ideas posited by Mrs. Lagarde and John Maynard Keynes and try to figure out how they relate to the crypto verse in general, and with Ripple in particular.
Breton Woods at 75
We start with the conference event that celebrated the IMF’s 75th birthday. In this occasion, Mrs. Lagarde joined a panel that discussed rethinking cross-border cooperation. You can watch the full discussion if you’d like (below this paragraph we’ll embed the video for you), we’ll just stick to the main idea, which is quite simple. The world has remained too dependent on the USD as the world’s primary currency, and that’s not good in terms of equality among financial systems.
John Maynard Keynes, the legendary economist, proposed an international currency called “bancor.” He did this as Bretton Woods was created. It was meant to be the legal tender for global operations, thus preventing dominance by any single national currency. His idea was declined in favor of the USD, which, of course, did become the most crucial currency in the world.
A supranational currency was always part of the initial Keynes plan, which was the ideological cornerstone from which both the World Bank and the IMF were born. The project was adopted almost in full, except for the neutral currency.
The exciting thing is that now we can see documents by both the IMF and the WB in which Ripple’s XRP is referred to as a “supranational currency” just as Keynes envisioned 75 years ago. In the same documents, Bitcoin is called a cryptocurrency. This is not a coincidence. Ripple is passionately opposed on calling XRP the cryptocurrency, which is why it names it a crypto asset or digital asset. Could this be the reason why?
The original Keynes plan
Digging a little deeper on the Keynes plan, we can find this quotation:
“A radical solution is to create a new international organization, an international central bank, to which would be handed over the foreign exchange reserves of all countries. This is the Keynes-Triffin Plan on International Liquidity. The major obstacle to its implementation would be the’ reluctance of countries to give up their sovereignty over reserves. But it can be considered as a proposal to set the ball rolling for future negotiations.”
This is a radical idea indeed, and it would inevitably face stiff opposition from most of the world’s governments and central banks because they would have to give up their international reserves, thus losing one of the handles they have to stir domestic economic development and monetary policy.
The central idea is still built around an international non-national currency, and XRP could just fit the bill. It already does in most ways. The IMF acting together with the World’s Bank as a central bank for central banks could use XRP as a settlement means between the banks of the world while keeping balance along with bilateral relationships.
Mrs. Lagrade didn’t come out and spoke overtly about XRP adoption, but she espoused a series of ideas in which XRP could fit perfectly as the system’s working currency. Besides that, Ripple is already working alongside 40 or 50 of the world’s central banks so it’s already developed a collaborative network that would allow it to take center stage if the old Keynes plan should become an option (again) for the IMF.
The IMF’s leader has singled out Ripple in the past (calling it a disruptor, for instance) above other digital assets which shows that she’s very well about Ripple, its technologies and its currency.
So it would only make sense for the IMF to take advantage of Ripple (XRP)’s already developed networks, technology, and reliability to bring forward the next world’s financial system. And the IMF’s head seems to be keenly aware of this.
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