Andorra, a landlocked country neighboring France and Spain, sought technical guidance from the International Monetary Fund (IMF) regarding the recording of Bitcoin (BTC) transactions. In September 2023, the IMF conducted a technical assistance (TA) mission in Andorra’s Principality to enhance the country’s balance of payments statistics, which primarily involves recording economic transactions between residents and non-residents.
Andorra, known for its ski resorts and tax-haven status, required assistance on various topics, including the inability to record cryptocurrency transactions. The Andorran Financial Authority (AFA), the country’s financial regulator, informed the IMF that banks in Andorra need prior approval to record Bitcoin and crypto asset transactions, although no banks have made such requests yet.
As a response, the IMF made several recommendations to Andorra. Firstly, the AFA should oversee the monitoring of crypto asset transactions and positions until September 2024. This recommendation was given medium priority, and the data collected will contribute to Andorra’s macroeconomic statistics.
In a separate study, the IMF discovered that digital currencies could fulfill the unique currency needs of Pacific Island countries (PICs). These countries, including Papua New Guinea, Fiji, Palau, Tonga, and others, face challenges due to their small size, diversity, and geographical isolation. The IMF proposed a regional approach to digital money to address issues like scalability restraints and economic volatility, while cautioning against the use of unbacked cryptocurrencies as national currency.
However, the IMF advised the island nations to proceed cautiously with their plans to introduce a central bank digital currency (CBDC), citing the unpreparedness of such initiatives.
In summary, the IMF provided technical assistance to Andorra regarding the recording of Bitcoin transactions and recommended the monitoring of crypto asset transactions. Additionally, the IMF proposed a regional approach to digital money for Pacific Island countries, while urging caution in the implementation of CBDCs.