IMF Recognizes Bitcoin's Role in Cross-Border Transactions
The International Monetary Fund (IMF) has released a comprehensive 43-page paper exploring the role of Bitcoin in global cross-border transactions. This marks a significant shift in the IMF's perspective on cryptocurrencies, acknowledging their relevance in today's financial landscape.
The study, titled 'A Primer on Bitcoin Cross-Border Flows: Measurement and Drivers', employs three distinct approaches to quantify international Bitcoin payments. These methods include on-chain data, Chainalysis data, and LocalBitcoins transaction data. The research reveals that Bitcoin flows are notably high in countries with low GDP, such as those in Latin America, Africa, Asia, and certain European nations.
The IMF observes that Bitcoin transactions on LocalBitcoins differ from on-chain payments, likely serving as remittance payments or to bypass capital controls. Interestingly, Bitcoin flows increase when the dollar strengthens, particularly in countries with low financial development. This suggests that Bitcoin is used as a currency risk hedge. Furthermore, Bitcoin flows are highest where traditional capital flows are low, indicating that it fills gaps left by traditional financial systems.
The IMF's paper, led by financial advisor Tobias Adrian, provides a neutral and open-minded assessment of Bitcoin's role in cross-border transactions. It finds that countries with robust financial systems, like the US, Switzerland, Japan, Canada, and Hong Kong, have the lowest Bitcoin flows. The study underscores the importance of further research and understanding of cryptocurrencies in the global financial context.
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