IMF Provides Andorra with Expertise on Managing Bitcoin Transactions; Advises Caution for Pacific Island Nations
Summary:
The International Monetary Fund (IMF) has provided expert advice to Andorra on managing Bitcoin transactions, as the nation sought assistance on this issue among others. The IMF report gave directions on the existing procedures for tracking Bitcoin and other digital assets according to international standards. Furthermore, the IMF advised the Andorran Financial Authority to oversee cryptocurrency transactions until September 2024. An IMF study also suggested that digital currencies could address specific currency needs of Pacific Island countries, while cautioning against unsupported cryptocurrencies as national currency.
In response to a plea for help, the International Monetary Fund (IMF) provided expert guidance to the landlocked nation of Andorra, nestled between France and Spain, on managing Bitcoin (BTC) transactions. The IMF visited the Principality of Andorra in September 2023 with the purpose of refining the country's balance of payments statistics, a measure largely concerned with documenting financial dealings between domestic and foreign entities.
Famed for its ski resorts and recognized as a tax haven, Andorra sought professional assistance on 56 different topics, one key issue being its inability to track cryptocurrency transactions. To address this, the IMF offered insight into the present procedures for logging Bitcoin-oriented digital assets and shed light on anticipated changes regarding the future international standards.
Andorra's financial watchdog, the Andorran Financial Authority (AFA), informed the IMF about the necessary pre-approval banks in the country require to keep track of Bitcoin and other cryptocurrency transactions. Despite this, no banks have so far pursued this approval.
The IMF advised that the AFA be put in charge of observing crypto asset transaction and position till September 2024, prioritizing this recommendation as medium. This monitoring information would then benefit Andorra as it collects its macroeconomic data.
A recent study by the IMF discovered that digital currencies could effectively address the specific currency requirements of Pacific Island countries (PICs), these being small, diverse, and geographically remote markets encompassing nations such as Papua New Guinea, Fiji, Palau, Tonga, Tuvalu, Samoa, Vanuatu, Micronesia, Kiribati, Nauru, the Marshall Islands, the Solomon Islands, Cook Islands and Niue.
However, the IMF posed a cautionary statement on the use of cryptocurrencies lacking solid backing as national currency. Rather, it suggested that executing a regional strategy for digital money could be a potential solution for issues like scalability limitations and economic instability. The IMF noted, "Certain PICs are more susceptible to the replacing of their currency with crypto assets and stable currencies, owing to the lack of trust in their own monetary systems and the absence of other public-backed digital assets such as Central Bank Digital Currencies (CBDCs)."
The report gravitated more towards a gradual, thoughtful approach towards digital currency, simultaneously advising the island groups to refrain from introducing a Central Bank Digital Currency (CBDC) given their unpreparedness.
Published At
3/14/2024 11:36:31 AM
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