IMF Helps Andorra Track Bitcoin Transactions

The International Monetary Fund (IMF) has provided technical advice to Andorra regarding the recording of Bitcoin transactions. Andorra, a country located between France and Spain, reached out to the IMF for assistance in improving its balance of payments statistics. This metric focuses on recording economic transactions between residents and non-residents. The IMF conducted a technical assistance mission in Andorra in September 2023, where they addressed various topics, including the country’s inability to record cryptocurrency transactions.

In response to Andorra’s request, the IMF explained the current guidance on recording Bitcoin and similar crypto assets, as well as how these guidelines will evolve in future international standards. The country’s financial regulator, the Andorran Financial Authority (AFA), informed the IMF that banks in Andorra require prior approval to record Bitcoin and crypto asset transactions. No banks have yet sought this approval. The IMF also recommended that the AFA oversee the monitoring of crypto asset transactions and positions until September 2024, ranking this recommendation as a medium priority. Andorra can utilize this information to compile its macroeconomic statistics.

A recent study conducted by the IMF revealed that digital currencies could assist Pacific Island countries (PICs) in meeting their specific currency requirements. PICs refer to small, diverse, and geographically isolated markets such as Papua New Guinea, Fiji, Palau, and others. While the IMF acknowledged the potential benefits of digital currencies for these countries, it issued a warning against the use of unbacked cryptocurrencies as national currency. Instead, the IMF advocated for a regional approach to digital money, emphasizing that such an approach would help manage issues like scalability limitations and economic volatility.

The report stressed the need for cautious and deliberate action when it comes to adopting digital currencies. It urged the Pacific Island nations to refrain from introducing a central bank digital currency (CBDC) due to their lack of readiness. The IMF suggested that these nations focus on building confidence in their domestic monetary systems and exploring the possibility of publicly supported digital assets like CBDCs before moving forward with introducing digital currencies.

The IMF provided technical advice to Andorra on recording Bitcoin transactions as part of its effort to enhance the country’s balance of payments statistics. The IMF also conducted a study on how digital currencies can benefit Pacific Island countries, emphasizing the importance of regional collaboration and caution in adopting digital currencies.