Capital flow management measures in the digital age

Capital flow management measures in the digital age


Dong He; Annamaria Kokenyne; Xavier Lavayssiere; Inutu Lukonga; Nadine Schwarz; Nobuyasu Sugimoto; Jeanne Verrier

Publication date:

May 11, 2022

Electronic access:

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Capital flow management (CFM) measures can be part of the broader policy toolkit to help countries reap the benefits of capital flows while managing the associated risks. Their implementation generally requires financial intermediaries to verify the nature of the transactions and the identity of the parties to the transaction, but face the growing challenge of crypto assets. Indeed, crypto assets have become an important instrument for payments and speculative investments in some countries. They can be traded under a pseudonym and held without identifying the residence of the asset holder. Many crypto service providers operate across borders, making it more difficult for national authorities to oversee and enforce. The challenges posed by the attributes of crypto assets are compounded by gaps in legal and regulatory frameworks. This article aims to discuss how crypto assets could impact the effectiveness of CFMs from a structural and longer-term perspective. To safeguard the effectiveness of CFMs in the face of crypto-related challenges, policymakers should consider a multi-faceted strategy whose core elements include clarifying the legal status of crypto assets and ensuring that CFM laws and regulations cover them; design a comprehensive, consistent and coordinated regulatory approach to crypto assets and apply it effectively to CFMs; establish international collaboration agreements for the supervision of cryptographic assets; fill data gaps and leverage technology (regtech and suptech) to create anomaly detection models and red flags that will enable timely risk monitoring and CFM implementation.


FinTech Note No. 2022/005





Publication date:

May 11, 2022



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