Just as soon as it was announced that Christine Lagarde, the current head of the IMF, was the frontrunner to replace Mario Draghi as he departs the European Central Bank, there was then immediate speculation as to who would replace her at the IMF. The first name that has been bandied about is Mark Carney, Governor of the Bank of England. He is scheduled to step down from his current role in January of 2020, thereby solving any timeframe logistical problems. Betting odds are already at “5:1”, as well.
When speaking recently with journalists, Carney was quick to praise Christine Lagarde, but he became a bit evasive when asked if he wanted to replace her at the IMF:
I think we need to respect the process here. There’s a process to confirm [Lagarde at the European Central Bank] and then there’s a process to select her successor. There’ll come a time when that process is launched and that would probably be the right time to answer that.
Whereas Ms. Lagarde has been generally regarded as a crypto advocate, her public statements have also been cautious. She has favored the use of Central Bank Digital Currencies (CBDCs) as a prudent way to assist third-world economies that need to be more responsive to the poorer elements in the system. She is in favor of innovation and favors cryptos and blockchain technology, but only if they are controlled and comply with national statutes and assist law enforcement authorities when dealing with crime and money laundering activities.
Her most often quoted statement is one of carefully chosen words of caution:
I think the role of the disruptors and anything that is using distributed ledger technology, whether you call it crypto, assets, currencies, or whatever … that is clearly shaking the system. We don’t want to shake the system so much that we would lose the stability that is needed.
What about Carney and his feelings about cryptos? Frankfurter Allgemeine Zeitung recently published a piece about how Carney would differ from Lagarde with respect to cryptocurrencies. They were blunt and to the point – He is not a supporter of Bitcoin or Libra or any other cryptocurrency. He prefers fiat currency to any form of virtual of digitized money. As noted: “His remarks against Bitcoin (BTC) and Libra have been found to be proof enough”.
After the “hype” from Facebook’s recent announcement of its Project Libra, government officials and central banking heads have had time to digest the news and express their considered opinions in the press. Carney has been one negative voice among many others that are not too thrilled about Libra and what it might mean for money laundering and the potential hiding of ill gotten gains by the criminal elements within our society.
Carney is fearful that not enough has gone into the front end of planning to ensure that all issues that need to be addressed have been addressed, a common theme from other central bankers, as well:
If you are a systemic payment system, you have to be on all the time. You can’t have teething issues, you can’t have people losing money out of their wallets. This is not learning on the job stuff, it’s got to be rock solid right from the start or it’s not going to start.
There are other potential names that have been mentioned in addition to Carney. These include former Reserve Bank of India Governor Raghuram Rajan and former UK Chancellor George Osborne, the latter having told friends that he is interested. At present, France and Germany appear to favor Carney above all others, a plus in his corner, but as he has stated: “There’s a process.”