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IMF Foresees Central Bank Crypto Coming

CBDC, IMF Foresees Central Bank Crypto Coming

The International Monetary Fund (IMF) has predicted that central bank digital currencies (CBDC), or state-backed crypto, would soon be a reality, with central banks already issuing them in the near future.

The report does seem to ignore that Venezuela at least has already released a CBDC, although of course, its legitimacy is highly in doubt, but it does recognize that several central banks in various countries throughout the world are already implementing some form of CBDC. It makes mention of the pilot program in Uruguay, and others like the Bahamas, China, Eastern Caribbean Currency Union, Sweden, and Ukraine, whom it says are “on the verge” of kicking off system trials.

The full paper described how the IMF, together with the World Bank, launched a fintech survey, seeking responses from member countries’ financial institutions and then basing off their conclusions in part from the responses received from 96 participating countries. This number does put it into a fairly broad global perspective.

The report as well talks about the research conducted by several central banks keen to learn more about CBDC’s potential impact on financial stability, as well as on the structure of the banking sector. The potential for non-bank financial institutions to enter and monetary policy transmission was also covered.

The findings show different motivations for a CBDC, with interest coming equally from developed economies as well as emerging ones. While developed countries seek to provide an alternative to cash as payment methods, especially as societies begin to go cashless, those trialing them in developing economies hope to reduce the costs of banking and tackling the issue of so-called unbanked populations.

A curious similarity is that none seek an anonymous CBDC as they all want these cryptos to be traceable by the state.

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France Announces G7 Crypto Task Force

G7

France’s central bank has announced plans to create a G7 task to specifically look into cryptocurrency regulations.

Governor Francois Villeroy de Galhau has selected a European Central Bank board member to lead its investigative team, stamping its authority as the current President of the Group of Seven Nations (G7)

The Group of Seven is a group consisting of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. These countries, with the seven largest IMF-described advanced economies in the world, represent 58% of the global net wealth.

“We want to combine being open to innovation with firmness on regulation. This is in everyone’s interest,” Villeroy commented on Friday, adding that what constitutes stability when it comes to finance needs clearer definition, referring of course to cryptocurrency stablecoins and news of Facebook’s much-publicized plans to join the market.

The governor also wants the European Banking Authority to flex its muscles in order to be able to override individual jurisdictions in Europe and create a network of national anti-money-laundering authorities; a much-approved move, given that many countries have been calling for such an agency for some time.

France, which holds the rotating presidency of the Group of Seven nations, has said it does not oppose Facebook creating an instrument for financial transactions. But it adamantly opposes that instrument becoming a sovereign currency.

The French are not alone in ramping up its attempts to keep a closer eye on cryptocurrency. Since Facebook entered the fray, many governments have started to call for ramping up anti-money laundering legislation over fears of an increase in illegal activity moving forward.

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IMF Talks Up Fintech’s Disruptive Potential

lagarde, IMF, fintech

Reuters reports that the International Monetary Fund (IMF) Managing Director Christine Lagarde has issued warnings over the increasing impact and presence of global tech giants who are using big data, artificial intelligence (AI) and fintech, possibly disrupting the global financial system.

Lagarde, in her address to the G20 finance leaders meeting in Fukuoka, Japan, specifically pointed to the rapid development of financial technology (fintech) resulting in cheaper payment and settlement systems for emerging economies where traditional banking networks are bare.

She said that this development could force policymakers the world over to reconsider the way they see banking and financial settlements should be regulated and made to comply:

“A significant disruption to the financial landscape is likely to come from the big tech firms, who will use their enormous customer bases and deep pockets to offer financial products based on big data and artificial intelligence.”

She admitted that financial markets would benefit from innovation but they could centralize and make vulnerable a small system controlled by a few tech giants: “This presents a unique systemic challenge to financial stability and efficiency, and one I hope we can touch on during the G20, and address in a cooperative and consistent fashion.”

She also pointed to China as a glaring example of fintech’s various benefits and shortcomings, showing how tech growth there has been extremely successful

Lagarde said China presents an example of the trade-off between benefits and challenges posed by financial technology, where millions now benefit from access to financial products and high-quality jobs, but where only two firms now control over 90% of the mobile payments market.

The IMF has had its past run-ins with the global community with its views and stance on fintech and emerging technology such as blockchain and crypto. It has its own quasi-crypto called Learning Coin but has warned the Republic of Marshall Islands over plans to launch their own crypto and told Malta there were significant risks of terrorism with blockchain.

 

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Marshall Islands Defies IMF with SOV National Crypto Development Fund

Marshall Islands Defies IMF with SOV National Crypto Development Fund

The Republic of the Marshall Islands has announced the establishment of a development fund that will directly support the development of the SOV, a planned national cryptocurrency for Marshall Islands.

This is despite thinly-veiled threats from the International Monetary Fund (IMF) that banks may choose to stop working with the tiny island nation should they choose to go ahead with its plans to wean itself off the US dollar.

In a press release, the state-established non-profit SOV Development Fund has been mandated to support the government in establishing, implementing and maintaining the SOV, which will be the nation’s digital legal tender.

Minister in Assistance to the President, David Paul, had addressed the Blockchain for Impact Summit at the United Nations Headquarters in New York, explaining how 30% of the token’s initial supply would be endowed to the fund:

“We are designing SOV in a way that will not place any burden on the government’s finances. The currency funds itself.”

Dr Peter Dittus, Chief Economist for SOV and former Secretary General of the Bank for International Settlements (BIS) further explained the fund’s mandate:

“… to maintain the SOV infrastructure long term; to seed the ecosystem around the SOV; to promote the SOV and its uses, both domestically and internationally; [and] to smooth the volatility… by selling and buying SOV against USD.”

The fund hopes to be fully independent, overseen by a seven-member board of directors. Two each will nominated by the state, a company called SFB Technologies, which will develop the token infrastructure. These four will then appoint three further directors from internationally recognized experts in blockchain, banking, and monetary management.

The press statement says that after the establishment of the national crypto, it will transition to a blockchain-based model of alternative governence, Once the blockchain and currency were established, the goal is to transition to an alternative governance model based on blockchain.

 

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Afghans Look to Sovereign Crypto Bond to Raise $5.8 Billion for Economy

Afghanistan is planning to jumpstart its ailing economy with a blockchain-based sovereign crypto bond. The announcement to attempt a cryptocurrency solution to three decades of economic turmoil came at a meeting of the Boards of Governors of the World Bank Group and the International Monetary Fund (IMF) in Washington recently.

According to the Central Bank of Afghanistan’s governor Khalil Sediq, the target figure is USD 5.8 billion in order to support the country’s critical mining, energy, and agriculture sectors, and with 25% of the country’s population currently unemployed and living under the poverty, critical measures are being assessed.

Afghanistan, as the of the world’s largest suppliers of lithium, could utilize Bitcoin with metals futures in bond form, according to the Afghan delegation, although IMF president Christine Lagarde believes such a bond will need thorough testing before it can be sold on markets.

Bitcoin has gained popularity in Afghanistan and its thought that cryptocurrency could find real leverage in the county if local money-sellers, called sarafis, were to start trading in digital currency. Afghans are generally untrusting of financial institutions and turn to sarafis, who deal with numerous fiat currencies across Afghanistan.

It appears that Afghanistan is not the only nation, considering some kind of a sovereign Bitcoin bond, as both Tunisia and Uzbekistan, both also represented by delegates at the Spring IMF and World bank forum, have also expressed interest in similar solutions.

Uzbek Ambassador to the United States Javlon Vakhabov sees an Uzbek bitcoin bond being linked to the country’s cotton futures market, much along the lines of Afghanistan’s plan for lithium futures. Uzbekistan has recently legalized crypto trading in the country and has announced some initial regulations for both trading and mining. The new decree, “On measures to organize the activities of crypto-exchanges in Uzbekistan”, states any company providing for the purchasing of or sale of crypto assets on a platform will be recognized as a legal exchange.

 

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Could IMF’s “Learning Coin” Mean a Shift from Fear and Loathing to Acceptance?

Could IMF’s “Learning Coin” Mean A Shift From Fear and Loathing to Acceptance

The International Monetary Fund (IMF) and the World Bank’s recent announcement suggest that they are not quite going crypto, but are nonetheless launching a private blockchain complete with a coin. And this could have major implications for world finance.

Although the “Learning Coin” may be a new concept that the two financial giants have carefully designed to carry no monetary value, but with plenty of stored intellectual content, this could be seen as an indication that change is in the air when it comes to the financial establishment’s tolerance-come-actual-interest in cryptocurrency as 2020 approaches.

When these two agencies make a murmur, the financial establishment pricks up their ears. The intention seems clear when the IMF states that “the development of crypto-assets and distributed ledger technology is evolving rapidly, as is the amount of information (both neutral and vested) surrounding it”, without accompanying it with the usual criticism of abuse and misuse. That said, IMF chief Lagarde’s concerns are still clear. Her views indicate that it is very much about treading carefully and testing the water at this stage:

“…we don’t want innovation that would shake the system so much that we would lose the stability that is needed.”

Of course, the IMF is always ready to cast one keen protective eye across the global financial landscape, such as in the agency’s recent warnings to Malta regarding its rate of blockchain and cryptocurrency adoption, saying that unchecked proliferation carries “significant risks” for money laundering and terrorism. during a recent financial assessment carried out on the island.

Another hint that the financial establishment may be leading from the top in its softening attitudes towards cryptocurrency can be seen in its recent online poll, on its own website, asking the question asking “How do you think you will be paying for lunch in 5 years?”  — a clear attempt to measure public feelings on cryptocurrency.

This needs to be balanced with the IMF’s stance regarding state cryptocurrencies. To date, it has come down hard on countries considering the move. There is a critical view held by economists in some countries whose governments may be considering moves to adopt a national cryptocurrency, that a mass decentralization of financial power may result in the diminishing of IMF’s authority.

A warning by IMF deputy director Dong last year clearly suggests that the organization may be secretly worried at the movement towards global digital currency adoption. While admitting that cryptocurrency had an advantage over banks when it comes to speed, anonymity, and divisibility, Dong claimed then that Bitcoin’s fixed supply was a disadvantage since that would lead to deflation, which is theorized to reduce economic activity due to money hoarding. According to him, a stable monetary system must protect against deflation.

It remains to be seen how long the IMF can tread this middle path of warnings and dabblings, caught between fear and acceptance of what many in the crypto space see as the inevitable global adoption of cryptocurrency. What of its latest toe in the water; its so-called “hub for knowledge”? It could be just a possible novelty or distraction for the agencies’ Washington-based employees at first glance, but although the two giants watching over the world’s monetary control are not predicting a permanent place for blockchain anytime soon amongst the worlds banking system and even less for cryptocurrency, they are nonetheless peeking under the carpet; not quite fear and loathing, but apprehension with interest.

 

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IMF, World Bank Launch Private Quasi-Crypto ”Learning Coin”

IMF, World Bank Launch Quasi-Crypto ''Learning Coin''

A joint private blockchain project from the International Monetary Fund (IMF) and the World Bank is being launched to help educate institutions and gain a better understanding of both blockchain and cryptocurrencies.

A quasi-cryptocurrency dubbed ”Learning Coin” will also be used during the project, although it is stressed that the token will have zero monetary value and will be inaccessible outside of the IMF and World Bank.

In a statement, the IMF noted that the rapidly evolving technologies in the cryptocurrency space had forced the institution to admit a ”growing knowledge gap.” The Learning Coin project is an effort to bridge that gap, for legislators and policymakers to gain a better understanding.

The project will offer knowledgable insights via a website, blog posts and videos, all looking to investigate the principles of distributed ledger technologies. Reaching educational milestones on the private platforms will earn the employees Learning Coin tokens as a reward; while they will not be able to exchange them for currency, it is suggested the developers will be able to exchange them for some form of reward.

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Malta Banks Deny Blockchain, Crypto Operators Custody Service

Malta Banks Deny Blockchain, Crypto Operators Custody Service

In the past year, the Island of Malta made a name for itself as it strived to become the go-to-hub for blockchain and cryptocurrency businesses. However, it now appears that startups are encountering problems with account opening in local banks, as banks say cryptocurrency businesses are outside their risk appetite.

Last week, Times of Malta was able to gather information from crypto-related businesses setting up shop in Malta, following the trends of moving from toxic jurisdictions to more a friendly one. According to the news outlet, the sources confirmed that banks were politely declining their businesses.

While risk appetite may have been one of the reasons provided by the banks, another possible one is that the banks may be waiting for more clarity from Malta’s Financial Service Authority (MFSA) before attending to cryptocurrency startups. More so, it seems the banks are having a hard time distinguishing between cryptocurrency and blockchain-related ventures, and are lumping them up as a sum.

According to the Parliamentary Secretary for Financial Services, upon investigating the problem further, he discovered:

“The general understanding is that when it comes to crypto operators, banks are waiting for operators to obtain an MFSA license before opening their doors – which is understandable.”

The MFSA had said earlier that all crypto ventures aiming to operate from the Island should obtain licenses, and while it had said the first licenses would be issued in the first quarter of this year, the International Monetary Fund’s (IMF) interference with the process may have throttled the process, thereby creating a bureaucratic bottleneck.

The IMF expressed worry about the speed in which the blockchain industry in Malta had been developing and wanted more cautionary steps to be taken. In a report enumerating its risk assessment on the financial stability involving virtual-assets, it recommended immediate action on some critical gaps in Malta’s supervision for combating the Financing of Terrorism (CFT) and Anti-Money Laundering (AML). The report further urged gradual enforcement of the laws and regulations.

 

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HSBC Whistleblower Is Developing His Own Cryptocurrency

Hervé Falciani, the French-Italian whistleblower who helped track down tax evaders with 130,00 Swiss bank accounts in the 2008 Valencia Polytechnic University crash, is to launch a new cryptocurrency.

Falciani became renowned as the HSBC ex-employee turned whistleblower who provided several European countries classified information on thousands of Swiss bank clients who were evading taxes, most of which were managed by a subsidiary of his employers at the time, HSBC Private Bank.

He created what became known as the “Lagarde list” of HSBC account holders who allegedly used the financial institution’s services for money laundering and tax evasion, leaking the list to the current International Monetary Fund (IMF) head, Christine Lagarde, who was French finance minister at the time.

Continuing his anti-banking crusade, Falciani has now fallen back on crypto to clean up the financial space, by creating his own cryptocurrency – Tabu, which has been developed by ‘Tactical Whistleblowers’, a non-profit organization founded by Falciani.

To date, the Tabu token project has raised €1.3 million (appr. $1.47 million), however, an additional €2 million of capital is required in order to ensure adequate funding for the project’s ongoing development. Falciani’s mission is to cut corruption caused by what he sees as inefficiencies of the traditional banking documentation system, by also developing a blockchain powered registration system.

Tactical Whistleblowers, with its HQ in Valencia, is comprised of several academics with a strong background in Mathematics from the Valencia Polytechnic University.

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IMF Cautions Malta on “Significant” Terrorism, Laundering Risks Due to Blockchain Growth

IMF Inspection Reveals Malta Needs More Regulatory Oversight for Blockchain

The government of Malta has received cautionary notes from the International Monetary Fund (IMF) regarding its rate of blockchain and cryptocurrency adoption, warning that unchecked proliferation carries “significant risks” for money laundering and terrorism. during a recent financial assessment carried out on the island.

According to English daily The Times of Malta, IMF made this statement after a recent financial assessment carried out on the island. Reporting on the situational analysis put forward by the IMF, it said that the growth of blockchain in Malta has created significant risks of financial systems directed towards the likelihood of increased money laundering and financing terrorist activities.

Malta has in recent times been recognized as one of the leading countries in Europe and the world that has favorable policies towards the development of blockchain enterprises. The rate of development has set Malta on the map as one of the go-to places for anything blockchain and crypto-related businesses.

While efforts towards accelerating the development of the industry are being lauded, the IMF showed concerns about the supervisory system currently in place and suggested emphatically that the authorities should improve their understanding of the risks and employ adequate sanctions in case of breaches.

The IMF also thought there was a need for improvement in staffing and formulate a long-term guaranteed financial and operational independence supervisory system as according to it, Malta’s Financial Services Authority was experiencing strain in operation due to an increased number of fintech operators with extensive new products and evolving regulatory environment.

Malta’s declaration of being a blockchain island was underlined by its recently-enacted policies covering new technology and digital assets. This may have caused a positive development for the industry but also increased the risks involved that may result from a lack of proper oversight. The IMF assessment should enable the authorities to re-evaluate their current situation and ensure that the systems put in place are foolproof.

Perhaps, this development brought about by the IMF will also stir up other jurisdictions working towards harmony with the blockchain industry to further improve their policies and regulatory framework to ensure a healthy crypto ecosystem.

 

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