In order to better oversee cryptocurrency holdings, among other things, the landlocked nation of Andorra approached the International Monetary Fund for technical help.
Andorra is a landlocked republic that borders France and Spain. In response to their request for help, the International Monetary Fund (IMF) offered technical advice on how to record Bitcoin transactions.
The Principality of Andorra was the site of a September 2023 IMF technical assistance (TA) trip intended to improve the country’s BOP statistics. Economic exchanges between residents and non-residents are the primary focus of the measure.
Among the 56 areas in which the ski resort nation of Andorra needed technological help was its failure to keep track of crypto transactions. The country is famous for being a tax haven. According to the IMF study, the reaction was:
“The (IMF) mission) outlined the present recommendations for the documentation of digital assets similar to Bitcoin and how they would evolve in the subsequent iteration of global norms.”
According to the Andorran Financial Authority (AFA), the country’s financial authority, Andorran banks are required to get prior clearance before they may record transactions using Bitcoin and other crypto assets. But thus far, no financial institutions have asked for permission.
In addition, the IMF suggested that the AFA keep an eye on crypto asset transactions and holdings until September 2024. Priority was given to the IMF’s suggestion to keep an eye on cryptocurrency assets. The data will be useful for Andorra’s macroeconomic report.
According to a new report from the International Monetary Fund, digital currencies may assist PICs in satisfying their specific monetary requirements. Papua New Guinea, Fiji, Palau, Tonga, Tuvalu, Samoa, Vanuatu, Micronesia, Kiribati, Nauru, the Marshall Islands, the Solomon Islands, the Cook Islands, and Niue are all constituents of the small, varied, and geographically separated PIC market.
Meanwhile, the International Monetary Fund cautioned against establishing national currencies based on unproven cryptocurrency. Nevertheless, according to the IMF, addressing digital money on a regional level would be beneficial in reducing issues like economic instability and scalability constraints.
Crypto assets and stablecoins are replacing certain PICs’ currencies because people in these countries don’t have faith in their own monetary systems and there aren’t any other digital assets, like CBDCs, that the government backs.
As a whole, the paper advocated for cautious, methodical approaches to digital currency and cautioned the island states from rushing toward the introduction of a central bank digital currency (CBDC) due to internal incompetence.
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