Andorra, a landlocked country bordering France and Spain, sought technical advice from the International Monetary Fund (IMF) on how to record Bitcoin (BTC) transactions. In September 2023, the IMF conducted a technical assistance mission in Andorra to enhance the country’s balance of payments statistics, which primarily involve economic transactions between residents and non-residents.
Andorra, known for its ski resorts and tax-haven status, requested assistance on various topics, including the recording of cryptocurrency transactions. The Andorran Financial Authority (AFA), the country’s financial regulator, informed the IMF that banks in Andorra require prior approval to record Bitcoin and crypto asset transactions, although no banks have yet requested this approval.
As part of its recommendations, the IMF proposed that the AFA oversee the monitoring of crypto asset transactions and positions until September 2024. This recommendation was given medium priority, and the information gathered will assist Andorra in compiling its macroeconomic statistics.
In a separate study, the IMF found that digital currencies could meet the unique currency needs of Pacific Island countries (PICs). These countries, including Papua New Guinea, Fiji, Palau, and others, are small, diverse, and geographically isolated markets. However, the IMF cautioned against the use of unbacked cryptocurrencies as national currencies and instead suggested developing a regional approach to digital money to address scalability restraints and economic volatility.
The IMF report emphasized the importance of careful and deliberate action regarding digital currency, advising the island nations to postpone their plans to introduce a central bank digital currency (CBDC) due to unpreparedness.
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