IMF Executive Board Approves Framework For Crypto Policy

Key Points:

• The International Monetary Fund’s (IMF) executive board has reviewed and agreed with the proposed policy framework in a paper titled “Elements of Effective Policies for Crypto Assets.”
• The paper was dated January 2023, and the executive board discussed it on February 8, but it was made known to the public on February 23.
• IMF is more favorable towards central bank digital currency (CBDC). It announced in September that it was working on an interoperable CBDC platform.

The International Monetary Fund’s (IMF) executive board has reviewed and agreed with the proposed policy framework in a paper titled “Elements of Effective Policies for Crypto Assets.”

The paper developed nine policy principles that addressed macro-financial, legal and regulatory, and international coordination issues.

The proposed principles were broad, emphasizing analysis, monitoring, and safeguarding. The paper explicitly stated that the “Directors should take up the proposals.” The first principle contained a concrete injunction: to safeguard monetary sovereignty and stability by strengthening monetary policy frameworks and not grant crypto assets official currency or legal tender status.

The executive board expressed its agreement with the proposals in the paper and endorsed its position on crypto as legal tender, with members generally agreeing with it. The board also reiterated the principle of “same activity, same risk, same regulation”. It emphasized that the IMF could serve as a thought leader in further analytical work on crypto assets.

The paper was dated January 2023, and the executive board discussed it on February 8, but it was made known to the public on February 23.

The IMF has long opposed the use of crypto as legal tender, particularly since El Salvador adopted Bitcoin as its official currency in September 2021. Its latest statement on El Salvador was released on February 10 and was criticized by the crypto community. The fund has also urged the adoption of greater crypto regulation.

IMF is more favorable towards central bank digital currency (CBDC)

In contrast to cryptocurrency, the IMF is more favorable towards central bank digital currency (CBDC). It announced in September that it was working on an interoperable CBDC platform.

In conclusion, the IMF’s executive board has reviewed and agreed with the proposed policy framework in a paper on crypto asset policy, emphasizing macro-financial, legal, regulatory, and international coordination issues. While the fund opposes the use of crypto as legal tender, it is more favorable towards CBDC and has been working on an interoperable CBDC platform since September.

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