IMF to step up work on digital currency as FM flags terror threat
NEW DELHI: The International Monetary Fund on Tuesday vowed to expand its work on crypto assets, amid a call from finance minister Nirmala Sitharaman to evolve a consensus to deal with digital assets. During a panel discussion early Tuesday morning (India time) Sitharaman flagged concerns over possible misuse of private digital currencies for money laundering and terror financing and reiterated the government’s stand that one country alone cannot regulate the use of the rapidly rising instrument.
Besides, she said that the technology to deal with crypto assets needs to continuously evolve. “Regulation using technology is the only answer. Regulation using technology will have to be so adept, that it is not behind the curve, but be sure that it is on the top of it. And that’s not possible if any one country thinks that it can handle it. It has to be across the board,” the FM said.
Indian authorities are working on a legislation on crypto assets but are unclear if a full-fledged ban, as was advocated by an expert panel as well as the Reserve Bank of India (RBI), will work unless other countries are also on board. For the time being, the government has imposed a tax on crypto transactions, including a 1% tax deduction at source, which Sitharaman said was essential for establishing a money trail.
She also said that the evolution of technology and schemes – from Aadhaar to Jan Dhan – had prompted her to announce the Central Bank Digital Currency (CBDC) in the budget, which is expected to be rolled out by RBI during the current financial year.
While acknowledging some of the concerns, IMF managing director Kristalina Georgieva said that the multilateral agency will expand its work on digital money with a special focus on interoperability of CBDC, regulation of private digital currencies and risks from cyberattacks. Although she was upbeat about CBDC, the IMF chief appeared worried over private digital currencies posing a threat to the currency sovereignty of smaller economies.
Her comments came amid backing from the Singapore and Brazilian central banks on CBDC making international transfers smoother and easier for individuals, even Monetary Authority of Singapore managing director Ravi Menon said he did not see a “compelling case” for retail digital currencies launched by central banks.