IMF explores ICOs and central bank coins in blockchain note
The International Monetary Fund (IMF) is exploring how digital ledger technology can be used for cross-border payments and as part of a central bank-backed currency. An IMF staff discussion note, called Fintech and Financial Services: Initial Considerations, touched on how digital tokens are being used to represent securities and ownership rights through initial coin offerings (ICOs). It stopped short of making a formal statement about blockchain, but raised questions about the legal effects of digital token transfers and the possibility of future regulation.

Author/Editor:

Celine Rochon ; Dong He ; Hervé Tourpe ; Mikari Kashima ; Nigel Jenkinson ; Ross B Leckow ; Tanai Khiaonarong ; Tommaso Mancini Griffoli ; Vikram Haksar

Publication Date:

June 19, 2017

Electronic Access:

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Summary:

A new wave of technological innovations, often called “fintech,” is accelerating change in the financial sector. What impact might fintech have on financial services, and how should regulation respond? This paper sets out an economic framework for thinking through the channels by which fintech might provide solutions that respond to consumer needs for trust, security, privacy, and better services, change the competitive landscape, and affect regulation. It combines a broad discussion of trends across financial services with a focus on cross-border payments and especially the impact of distributed ledger technology. Overall, the paper finds that boundaries among different types of service providers are blurring; barriers to entry are changing; and improvements in cross-border payments are likely. It argues that regulatory authorities need to balance carefully efficiency and stability trade-offs in the face of rapid changes, and ensure that trust is maintained in an evolving financial system. It also highlights the importance of international cooperation.