Cryptocurrencies finally grab IMF’s attention?

The International Monetary Fund (IMF) has reaffirmed its interest in cryptocurrencies through a report Monetary Policy in the Digital Age which concludes, interestingly, that: “Crypto assets may one day reduce demand for central bank money.”

The report which centres on virtual currencies examines the evolution of money analysing the pros and cons of crypto assets the dangers they pose on the functionality and relevance of central banks and proposes solutions thereto.
The IMF report argues that the global financial crisis and the bailouts of major financial institutions renewed skepticism on the central banks’ monopoly on the issuance of currency consequently leading to the mushrooming of Bitcoin and other crypto assets.

Read a brief analysis of the IMF Report by Brian Tororei here.

These assets, the IMF argues, may one day serve as alternative currencies thus reducing demand for fiat currencies on the account that they offer anonymity of cash, allow transactions at long distance and the unit of transaction can potentially be more divisible thus proving more attractive for micro payments in the sharing and service-based digital economy.

The IMF correctly points out that there are hurdles that crypto assets need to clear before they achieve their full potential including their present high volatility and risk and the fact that they enjoy less trust than fiat currencies.

The IMF also argues that the central banks could counter the pressure that cryptocurrencies may exert on fiat currencies through a raft of measures including but not limited to making their fiat currencies better and more stable units of account and being open to fresh ideas and new demands, as economies evolve; enhancing regulation of crypto assets to prevent regulatory arbitrage and any unfair competitive advantage on account of lighter regulation; and making their money attractive for use as a settlement vehicle.

Read more here.

KT Law Associates is a specialist firm dealing with Technology Media and Telecommunication. Kindly contact us for legal advice and questions on Blockchain Technology among other areas.

Blockchain finds one of its Use Case in Kenya

The collaboration between IBM Research and Twiga Foods has seen the launch of a business-to-business logistics platform for kiosks and food stalls in Africa.

The platform, a blockchain-based system has since seen 220 food stall retailers across Kenya benefit from microloans through an eight (8) week pilot phase that not only benefited the retailers but also the platform as it provided feedback for necessary iteration.

Read more at: IBM and Twiga Foods Introduce Blockchain-Based MicroFinancing for Food Kiosk Owners in Kenya

The platform is a financial inclusion service targeting the Small and Medium-Sized Enterprises (SMEs) which often have difficulties accessing financing given that most SMEs are characterised by lack of collateral to be used as security.

The platform is mobile based and employs machine learning capabilities to assess the applicants’ credit worthiness thus boosting lender confidence, the absence of which has also contributed to the would-be-extinct financial exclusion of SMEs.

Given the success of the pilot, the platform is likely to see further and wider deployments across Africa in the coming months.

Related Story: Kenya’s food kiosk owners embrace blockchain-based microfinancing

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