An article from Investopedia recently caught my attention: “IMF Urges Banks to Invest In Cryptocurrencies”
The opening sentence of the article states: “A June 2017 staff discussion note from the International Monetary Fund (IMF) suggests that banks should consider investing in cryptocurrencies more seriously than they have in the past.”
Let’s investigate the claim.
I searched the 49-page document for the word “invest” and all of its derivations. Here are the results:
- Fintech firms have attracted substantial investment in recent years, while public interest has grown significantly.
- Most firms have remained small––reflecting their knowledge-based business model––but investment in them has risen substantially.
- Total global investment in fintech companies reportedly increased from US$9 billion in 2010 to over US$25 billion in 2016.
- Venture capital investment has also risen steadily, from US$0.8 billion in 2010 to US$13.6 billion in 2016.
- The financial sector covers five broad functions. These are to (i) make and receive payments, including across borders; (ii) save to be able to consume or invest later; …
- In financial markets, investment opportunities are often indivisible (need to be funded in their entirety to pay off).
- Similarly, pooling allows savers to make more liquid and shorter-term investments than are available.
- Footnote 3: To the extent that the liquidity needs of individual savers are randomly distributed and independent of one another, intermediaries can keep only small reserves of liquid funds, and the interest rate risk of longer-term investments can be hedged across projects of different maturities.
- …monitoring and studying the implications of technological change for financial stability, market integrity, efficiency, and investor protection …
- Footnote 13: For example, the Australian Securities and Investment Commission has signed agreements with the U.K. Financial Conduct Authority (FCA), …
- Finally, as highlighted further below, the significant market power of correspondent banks and capturing firms allows them to extract revenue through direct fees, FX spreads, and delays while liquidity is invested (called “float”).
- vertical integration is a response to the potential hold-up problem whereby relationship-specific investments leads to ex-post haggling about monopoly or monopsony rents.
Pure Fake News
There is no indication the IMF is “urging” banks to do anything at all, let alone urging banks to “more seriously” invest in cryptocurrencies.
In fact, one might read the following paragraphs and conclude just the opposite as Central Banks may start their own cryptocurrencies.
Central banks could offer their own digital currencies. A central bank digital currency (CBDC) would not be a parallel currency, but merely a widely available DLT-based representation of fiat money. The idea is not to introduce a new unit of account, but a new means of payment and store of value. The CBDC would presumably be exchanged at par with the central bank’s other liabilities (cash and reserves).
Central banks might introduce CBDCs for various reasons, though the balance of benefits and costs need further study. A CBDC might resolve the coordination problem over new virtual currencies, and thus spur technological innovation. Alternatively, it might allow the central bank to retain control of monetary policy effectiveness, in case privately-issued virtual currencies started to gain significant ground (though this is unlikely as suggested in He and others 2016)29. A DLT-based [Digital Ledger Technology] CBDC could also be more secure and resilient than current settlement systems which are exposed to single point of failure risk. Finally, by facilitating small value payments, it could boost the adoption and efficiency of the new, decentralized, service economy. However, CBDCs raise multiple potential costs and risks, such as managing the platform and its integrity, resolving scalability, and dealing with issues of privacy.
Pure Fake News (PFN)
To ensure the author did not confuse “invest” with “study” I did a second search and there is no urge for banks to even study the concept.
The Investopedia headline is pure fake news. All one has to do is read the article to prove it.
Mike “Mish” Shedlock
What is the point of this? Everyone knows that saying “fake news” implies that the reporter has some angle or agenda, yet you don’t offer what you think it is. Maybe it’s just bad reporting?
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I do not know their point or care what it is. This was tweeted all over the place and people believe it.
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I wasn’t aware, but that does give it a point.
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To encourage inexperienced speculators imho.
Sign of a top in various cryptos.
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If you’re selling a product, you be got to promote it.
Virtually all “journalism” is nothing but clickbait. They’re selling ad space. It’s a business like anything else.
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That’s also called “churnalism.”
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I think by “invest” in cryptocurrencies the author meant “adopt the technology” of cryptocurrencies and use it.
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I thought about that possible interpretation but it does not seem to fit either. The IMF did not urge adoption of anything. Study does not for either. Nothing really fits. My best guess is it is a clickbait headline stretched to the max. My problem is people believe this and repeat it.
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Well there you go. More fake news.
Nonetheless, Senegal and Tunisia have both announced a Central Bank cryptocurrency. However, at least in Senegal’s case, their cryptocurrency will not be a block chain solution, it will be a:
“…unique technology, essentially a digital printing press located in a central bank’s vault that creates digital objects with an associated quantum size that morph with each transaction. An algorithm confirms that only what was created is operating …”.
Senegal’s debt rating has been improving, currently rated as positive, I believe. Nonetheless, this shows that even the definition of ‘cryptocurrency’ is not clear.
http://africanbusinessmagazine.com/african-banker/senegal-creates-digital-currency-history/
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I’m waiting for the first email stating that Nigeria is announcing one, “with brand new technology that is sure to make it go up.” Then I’ll put all my money into it and get rich.
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Fake news about fake currencies. We have been led here by the central bandits. If you can print money out of thin air, why not create your own cryptocurrency? Makes sense. /s
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The original point of crypto-currencies was to avoid the Statist-controlled fiat currencies and the interference of government into private transactions. Banks being involved in it just negates its real value: privacy.
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“The original point of crypto-currencies was to avoid the Statist-controlled fiat currencies and the interference of government into private transactions.”
And the current effort, is for the statists to try obfuscating that point. By getting the less that bright amongst their captive drones, to think it’s all about complex sounding obfuscations like “blockchain technologies.” And that by the Junta getting involved, they can keep the “good” parts (pray tell what they are….), while “pjotecting us” against the baaad ones. Baaad, in their context, of course, referring to the privacy and non-debasability that were the whole purpose of the currencies in the first place.
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I find it amusing that the focus of mostly young guns is on technology (although their math skills leave something to be desired). The big issue of what value the crypto-currencies represent in the real world is somewhat lost on them.
As a tool of speculation? Yeh, but the tulips were first, as far as we know.
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A particularly sad consequence of Nixon getting completely off gold, is that, by now, entire generations of people have been conditioned to believe that “investing,” as in wasting a substantial portion of their lives on mindless drivel revolving around “trying to buy something that ‘goes up’,” is some sort of important and meaningful ritual that is important to engage in. Over and above simple saving/setting something aside/deferring consumption.
All that silly myth does, is waste resources, as well as enrich and empower those that take a cut from the childishness; our usual friends banksters, lawyers, realtors, apparatchiks and other asset pump beneficiary hacks.
Bitcoin is not immune either. Instead of the focus being, as it would in a non-idiotocracy, on usages for Bitcoin; areas where it held maximum advantage over Fiat; almost everyone in the US stand around like starry eyed children and wonder whether “it”, this something strange they don’t understand and don’t care to, has gone “up” or “down” or not. Like clowns jumping to the beat of Jim Cramer’s clueless rants.
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I think that it will find all sorts of uses. Some will be used by banks, others will be private, etc.
Brave browser (brave.com) by ex-Firefox developers has just raised $35 million as a ico to incorporate a built-in cryptocurrency payment system – so when you use your browser you can make payments too with very little transaction cost – at least that is the idea.
Trading platform etoro.com now permits trading in BTC and ETH. These technologies are spreading very fast and for many different purposes.
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Yeh, I have heard this story before in the late 1990s…the universe has changed were all rich, etc., etc. The whole shortage, difficulty in mining addition coins, reminds me of the “cold fusion miracle” that was a scam. There is no shortage of coins as anyone can set up their own cryptocurrencies and be the first one in the pyramid. I will admit it is a great crypto-tulip generator and speculation tool…until it isn’t.
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this is not fake news – it is “lying”.
looks like investopedia has engaged staff that are damaging its credibility as an authoritative source of “invest”ment information.
can they be sued or disbarred from publishing on the net? would make a great test case for significantly improving the accountability of the editorial content of libtard socialist rags like the NYT, WaPo, Economist, BBC and the FT.
perhaps since Canada is now banning all unverifiable content globally (that is, any internet content that be sourced anywhere in the world) the test case could be brought there, in the first instance.
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Well, that’s okay, then. Fake news is anything that supports Trump, true or not. Fake news is NOT okay.
Lying news that isn’t fake news is just par for the course, and is fine.
We need to put a stop to FAKE news.
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Courts can be useful.
Deliberate false news should be actionable if believed to influence voting, investment decisions and/or opinions of others.
That would help tidy up the left and right.
Bring on that test case and a test case against previous incumbent politicians shown to have made errors detrimental to the electorate through negligence.
People with power need to feel the FEAR felt by so many ordinary people treated as fodder.
Perhaps some crowd fund should be started, raise the money internationally using Bitcoin. Justice without borders.
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I have no idea whether cryptocurrencies will live up to all the hype and potential, but I do know that I put $4300 into etherereum in mid-February and it’s worth $103,000 as of right now and got up to $135,000 at the recent peak. So, whatever the reality, I’m nevertheless making a killing.
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excellent move
Congrats
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Nice one!
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The IMF is an organization without a purpose — it was set up to administer the Bretton Woods system, which was terminated back during Nixon’s presidency. The IMF is now just a place where the French dump the political cronies who don’t get elected.
Now a clueless reporter is writing a mockumentary about an organization that lost its purpose 45 years ago… what could possibly go wrong?
The scary part, as Mish alludes to, is that there are so many public education “graduates” that will read “IMF” and think it has some credibility… even before allowing for the cub reporter to mis-interpret what the defunct French politicians and academics maybe wrote.
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Reblogged this on World Peace Forum.
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Many journalists do not make the effort (or have the capacity) to understand what they are writing about, and few understand cryptocurrencies. So if the IMF feeds misleading propaganda to journalists, they will thoughtlessly regurgitate it.
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