Financial Decisions Bear Impact
IMF's New Guide Excludes Bitcoin Price as a Reserve Asset
The International Monetary Fund (IMF) has released an updated guide, BPM7, for standardizing financial statistics. This comprehensive manual, spanning over 1000 pages and the result of several years of work by hundreds of IMF statisticians, integrates cryptocurrencies into its statistical categorization system.
However, Bitcoin price does not find a place as a reserve asset in the IMF's categorization. The digital currency is considered 'non-produced nonfinancial assets', category AN22, due to its existence without corresponding liabilities. This means that when the IMF evaluates the conditions under which El Salvador can obtain a loan, it will consider the currency reserves held in foreign exchange, gold, and Special Drawing Rights, but not the reserves built up in Bitcoin price.
In contrast, stablecoins like DAI dollars, an algorithmically created stablecoin, are included in categories AF33 and AF34, which include 'crypto-assets with corresponding liabilities used as means of payment.' Stablecoins, unlike Bitcoin price, seem to be allowed by the IMF, but not algorithmically managed ones.
The IMF's new manual defines assets that are not eligible as reserves, including 'crypto-assets without corresponding claims that are used as a means of payment.' This categorization excludes Bitcoin price from being officially recognized as a reserve asset. As a result, the new IMF manual does not allow El Salvador to list the bitcoins it holds in the statistics of currency reserves.
The classification of other digital assets is more complex. For instance, securities in foreign currencies are allowed in the IMF's reserve asset categorization. The eligibility of Exchange-Traded Funds (ETFs) for this categorization is more difficult to decide. The BPM7 handbook categorizes Bitcoin price and other cryptocurrencies under financial assets, specifically as 'currency and deposits' or 'financial derivatives and employee stock options,' depending on their functional use and classification in international balance of payments statistics.
The classification of MicroStrategy's shares, which fluctuate in value with Bitcoin price, falls under the broad category of 'foreign exchange.' Cryptocurrency transactions will now be part of IMF economic statistics, providing a more comprehensive view of global financial activities.
BPM7 was commissioned by the IMF in 2020 to include cryptocurrencies. This move reflects the growing importance of digital assets in the global economy and the IMF's efforts to standardize and regulate them. Despite Bitcoin price's exclusion as a reserve asset, the inclusion in BPM7 marks a significant step towards the recognition and integration of cryptocurrencies into the global financial system.
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