IMF: Relevant safeguards must be reflected in digital currency project design
The International Monetary Fund (IMF) in its most recent Article IV Concluding Staff Statement points out that while The Central Bank of The Bahamas (CBOB) is looking at creating its own digital currency in order to increase financial inclusion across the archipelago, it can also achieve inclusion using technology that exists today.
“New financial technologies can advance financial inclusion; nonetheless, risks involving a central bank digital currency need to be well understood,” the IMF states.
“Wider geographic penetration of digital payments can also be achieved by modernizing payment systems and using proven technologies.
“The CBOB is planning to pilot a digital central bank currency to boost financial inclusion. The team welcomes the CBOB’s emphasis on protecting against risks to financial stability, cybersecurity and in the AML/CFT sphere, and recommends that relevant safeguards be carefully reflected in the project design.”
Even as The Bahamas moves towards its own digital currency, the IMF is warning the government of the need to shore up its AML/CFT regime in order to “strengthen financial integrity”, especially since the Financial Action Task Force (FATF) continues to point out deficiencies in that regime.
“Progress in further improving technical compliance of the AML/CFT regime, including by revising laws and regulations and strengthening supervisory guidelines and codes of conduct, is welcome,” the IMF’s statement points out.
“Continuing to move the focus to implementation to demonstrate the effectiveness of the AML/CFT regime, including in line with the FATF action plan, is recommended.”
The IMF further notes that reputational risks to the international financial sector continue to stain The Bahamas, even though the government has continually strengthened regulatory and transparency standards.
Education: Florida International University, BS in Journalism