BIS designs bitcoin monitor

BIS designs bitcoin monitor

Subject : Economy

Section: Monetary Policy

In News: BIS has come up with a Bitcoin monitoring system aimed at giving authorities a clearer picture on how, when and where the cryptocurrency is used.

Key Points:

• Bank for International Settlements (BIS) project, codenamed Atlas, began at the Dutch central bank more than five years ago.
•  Atlas created a “proof of concept” platform that sucks data from both publicly availa-ble “on-chain” crypto ledger as well as harder to source “off-chain” data reported by onlysome exchanges and users.
• That information then provides a rough picture of cryp-tocurrency activity, although as crypto wallets can be set up anonymously and without the owner specifying location, it is not necessarily precise.
• An initial analysis of data collected by the platform indi-cates that cross-border flows are substantial in economic terms and unevenly distributed across geographical Regions
• BIS’ ‘innovation hub prototype produces “dash-boards” that show information such as how many bitcoin are being converted into US dollars at certain times in certain parts of the world.
• They can also provide an insight into the adoption and relative importance of crypto markets as they rise or fall in popularity.
• Cross-border crypto flows are particularly relevant for central banks in the context of cross-border payments, economic analysis and balance of payments statistics, the BIS said.
• They may represent a sig-nificant part of cross-border transfers for some countries that is hard to quantify because of the current gaps in data.
• Central banks need to gain first-hand knowledge of crypto and DeFi and the risks and opportunities they present to the financial system