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Law > Business and Financial

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Cover FinTech Notes
Capital Flow Management Measures in the Digital Age (2): Design Choices for Central Bank Digital Currency
Mr. Dong He
,
Annamaria Kokenyne
,
Mr. Tommaso Mancini Griffoli
,
Mr. Marcello Miccoli
,
Mr. Thorvardur Tjoervi Olafsson
,
Gabriel Soderberg
, and
Hervé Tourpe
This fintech note looks at how capital flow measures (CFMs) could be implemented with central bank digital currency (CBDC), and what benefits, risks and complexities could arise. There are several implications of the analysis. First, CBDC ecosystems should generally be designed such that they can accommodate the introduction of CFMs. Second, thanks to the programmability of the payment infrastructure given by the new digital technologies, certain CFMs could likely be implemented more efficiently and effectively with CBDC compared to the traditional system. Third, implementing CFMs requires central banks to collaborate on practices and standards. Finally, CFMs on CBDC need to operate alongside traditional CFMs.
Keywords:
Central bank digital currency; Capital flow measures; CBDC implementation; CBDC ecosystem; IMF Fintech Note 2023/009; IMF Library; smart CFMs; fencing CBDC; Central Bank digital currencies; Capital flow management; Capital flows; Foreign assets; Digital wallets; Global
Cover FinTech Notes
Capital Flow Management Measures in the Digital Age: Challenges of Crypto Assets
Mr. Dong He
,
Annamaria Kokenyne
,
Xavier Lavayssière
,
Ms. Inutu Lukonga
,
Nadine Schwarz
,
Nobuyasu Sugimoto
, and
Jeanne Verrier
Capital flow management measures (CFMs) can be part of the broader policy toolkit to help countries reap the benefits of capital flows while managing the associated risks. Their implementation typically requires that financial intermediaries verify the nature of transactions and the identities of transacting parties but is facing the rising challenge of crypto assets. Indeed, crypto assets have become a significant instrument for payments and speculative investments in some countries. They can be traded pseudonymously and held without identification of the residency of the asset holder. Many crypto service providers operate across borders, making supervision and enforcement by national authorities more difficult. The challenges posed by the attributes of crypto assets are compounded by gaps in the legal and regulatory frameworks. This paper aims to discuss how crypto assets could impact the effectiveness of CFMs from a structural and longer-term perspective. To preserve the effectiveness of CFMs against crypto-related challenges, policymakers need to consider a multifaceted strategy whose essential elements include clarifying the legal status of crypto assets and ensuring that CFM laws and regulations cover them; devising a comprehensive, consistent, and coordinated regulatory approach to crypto assets and applying it effectively to CFMs; establishing international collaborative arrangements for supervision of crypto assets; addressing data gaps and leveraging technology (regtech and suptech) to create anomaly-detection models and red-flag indicators that will allow for timely risk monitoring and CFM implementation.
Keywords:
capital flow management measures; CFMs; crypto assets; digital currencies; Regtech; Suptech; untraceable transactions; crypto exchanges; distributed ledger technology; Bitcoin; FINTECH note; asset holder; capital outflow restriction; crypto asset Adoption; crypto-asset exchange; Virtual currencies; Capital flow management; Blockchain and DLT; Capital flows; Anti-money laundering and combating the financing of terrorism (AML/CFT); Global
Cover IMF Staff Country Reports
People’s Republic of China–Hong Kong Special Administrative Region: Financial Sector Assessment Program-Technical Note-Implications of Fintech for the Regulation and Supervision of the Financial Sector
International Monetary Fund. Monetary and Capital Markets Department
he Hong Kong Special Administrative Region (HKSAR) is among the world’s major fintech hubs, well positioned to develop fintech initiatives from its traditional strengths in financial services. Key factors enabling the HKSAR to emerge as a fintech hub include its presence as an international financial center, its free-flowing talent and capital, a highly developed information and technology communication (ITC) infrastructure, and its most unique trait, a geographical and strategic advantage by proximity to the market in Mainland China.
Keywords:
People's Republic of China-Hong Kong Special Administrative Region FSAP; banking Supervision department; Hong Kong exchange; People's republic of china-Hong kong special administrative region; banking ordinance; Fintech; Blockchain and DLT; Financial sector; Artificial intelligence; Global