So, apparently the IMF is now speaking out investment recommendations for Banks to directly improve their interaction with cryptocurrencies. Basically, I read the hole thing as a move in the direction of significantly increasing the friction on the topic and make banks get a much deeper understanding of the whole topic. Furthermore, the article is clearly analyzing the current banking system and the payment procedures (inside and between borders)
Overall, the financial services sector is poised for change. But it is hard to judge whether this will be more evolutionary or revolutionary. Policymaking will need to be nimble, experimental, and cooperative.
I actually find that to be quite remarkable and scary at the same time. How and Why would a highly volatile market with no clear regulation whatsoever. I mean we, as private investors, can hapilly accept all the risks being at hand and offer our money to the cryptocurrencies, but why would the IMF even suggest to invest into cryptocurrencies? The report seems to have supporting words for cryptocurrencies, as it outlines some of the ways that the fintech industry might be able to provide solutions for consumers .
Cross-border payments provide a case in point for applying the paper’s approach. The analysis of the demand for, and supply of, cross-border payments services, and the study of the market structure of service providers point to various shortcomings, driven by technological limitations, regulation, or market structure. Fintech innovations—in particular DLT—have the potential to offer important service improvements and cost savings, and may disrupt barriers to entry including the scale and network economies that are characteristic of cross-border payments. Some technical advances will undoubtedly be more disruptive than others, and will require the development of a supportive regulatory environment.
Furthermore, it encourages to actually further understand and use the fintech industry as a tool to have more insight into the minds of consumers and their needs for financial services or privacy.
A key uncertainty is whether the changes in financial markets will be gradual and evolutionary, or potentially disruptive. To the extent that the new technologies lower the cost of doing business, they could support more gradual change, indeed one where incumbents may acquire new technologies from new entrants. However, the introduction of new products that bypass existing intermediaries and markets, or network effects that very rapidly change existing market structures, could stimulate a more disruptive evolution.
Interesting stuff right there. I hope we can have a further discussion down the line. I am in the middle of reading the full thing and I hope we can all support each other to fully understand the full message at hand. Let's have a thorough exchange on what this article means to your own understanding and what the implications could mean for the market itself.
Please see below the sources as well as some first impressions from media.
Thanks guys!
Sources:
Article concerning this news
- http://www.investopedia.com/news/imf-blockchain-banks-invest-cryptocurrency-blockchain/
This article goes as far as using the word IMF URGES BANKS TO INVEST IN CRYPTOCURRENCIES, my personal assessment of the situation is that they are not urging to invest, but they are definitely refering banks to get more seriously involved into the topic, which would mean investments in the mid-long run.
Actual Paper concerning Fintech and Financial Services