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José Garrido, Ms. Yan Liu, Joseph Sommer, and Juan Sebastián Viancha
This note explores the interactions between new technologies with key areas of commercial law and potential legal changes to respond to new developments in technology and businesses. Inspired by the Bali Fintech Agenda, this note argues that country authorities need to closely examine the adequacy of their legal frameworks to accommodate the use of new technologies and implement necessary legal reform so as to reap the benefits of fintech while mitigating risks. Given the cross-border nature of new technologies, international cooperation among all relevant stakeholders is critical. The note is structured as follows: Section II describes the relations between technology, business, and law, Section III discusses the nature and functions of commercial law; Section IV provides a brief overview of developments in fintech; Section V examines the interaction between technology and commercial law; and Section VI concludes with a preliminary agenda for legal reform to accommodate the use of new technologies.
José Garrido, Ms. Yan Liu, Joseph Sommer, and Juan Sebastián Viancha

( Lopez 1971 ); then, with the industrial revolution in the 19th century; and finally with the internet revolution in the late twentieth century. These three economic revolutions are closely connected to the existence and evolution of commercial law. But the relations between the law, business practices, and technology are far from linear. Commercial law offers a framework for the development of business relationships. The legal framework offers predictability and flexibility as the key advantages for business activities. Business and technology have developed

José Garrido, Ms. Yan Liu, Joseph Sommer, and Juan Sebastián Viancha

Title Page FINTECH NOTE Keeping Pace with Change: Fintech and the Evolution of Commercial Law Prepared by Jose Garrido, Yan Liu, Joseph Sommer, and Juan Sebastian Viancha January 2022 Copyright Page ©2022 International Monetary Fund Keeping Pace with Change: Fintech and the Evolution of Commercial Law Note 2022/001 Prepared by Jose Garrido, Yan Liu, Joseph Sommer, and Juan Sebastian Viancha Names: Garrido, Jose Maria, 1965-, author. | Liu, Yan, 1967-, author. | Sommer, Joseph Hirsh, author. | Viancha, Juan Sebastian, author

International Monetary Fund
This paper aims to address questions by Fund members on how to respond to the rise of crypto assets and the associated risks. To frame the discussion, the paper defines and classifies crypto assets based on their underlying features and describes their purported benefits and potential risks. The paper presents a policy framework for crypto assets that aims to achieve key policy objectives such as macroeconomic stability, financial stability, consumer protection, and market and financial integrity. The framework outlines key elements that are necessary to ensure that these objectives are met. However, such a framework will not fix any underlying crypto design flaws (for instance, the lack of a credible nominal anchor, payments finality, or scalability).
Nadine Schwarz, Ms. Ke Chen, Ms. Kristel Poh, Ms. Grace Jackson, Kathleen Kao, and Maksym Markevych
The purpose of this note is to assist countries in their understanding and mitigation of the money laundering (ML), terror financing (TF), and financing of the proliferation of weapons of mass destruction (PF) risks related to virtual assets (VAs). This is the first of two Fintech Notes dedicated to VAs and anti-money laundering and combating the financing of terrorism (AML/CFT). This first note is broad in scope. It explains why VAs are vulnerable for misuse for ML/TF/PF purposes and clarifies which assets and service providers should be subject to AML/CFT measures. It discusses the measures that all countries should take, and the type of action necessary in instances of criminal misuse of VA. A second Fintech note focuses on the AML/CFT regulatory and supervisory framework for virtual asset service providers (VASPs). Both notes are based on Financial Action Task Force (FATF) standards and draw heavily on the FATF’s 2019 “Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers.” They aim at providing policy makers and authorities with AML/CFT responsibilities with an overview of the legal and operational considerations that the implementation of a sound AML/CFT framework for VAs and VASPs raises. In some instances, the notes make reference to specific types of VAs, VASPs, and related products. These references are made for illustrative purposes only, and do not constitute an endorsement of the specific VAs, VASPs, and related products. Finally, at the time of drafting, no country had been assessed against the new standards and many country authorities were in the process of establishing how best to incorporate the new standards in their AML/CFT framework. For these reasons, this note does not refer to specific country examples.
Cristina Cuervo, Jennifer Long, and Richard Stobo
This paper discusses progress on post-global financial crisis (GFC) reforms and the emerging challenges in the area of capital markets regulation and supervision, drawing on the analysis and insights from the IMF’s Financial Sector Assessment Program (FSAP). FSAP analyses sheds light on the implementation of post-GFC reforms to strengthen prudential and conduct supervision of capital markets and highlights new regulatory and supervisory challenges arising from several factors such as the growth of bond markets, benchmark transition, digitalization, and climate change. Key takeaways regarding implementation of post-GFC reform include significant progress with respect to oversight of market intermediaries and infrastructures and a case for further regulatory and supervisory action to address vulnerabilities arising from the high and rising interconnectedness of the asset management sector with the global economy, especially to foster stronger liquidity risk management. Emerging priority areas underscore the importance of ensuring the adequacy of issuer disclosures and quality of auditing; of examining and appropriately calibrating the regulatory perimeter in light of market developments; and of proactively safeguarding the operational independence of supervisory authorities and adequacy of their resources for implementation of regulatory frameworks that are fit-for-purpose in light of market developments and evolution.
Mr. Tobias Adrian, Federico Grinberg, Mr. Tommaso Mancini Griffoli, Robert M. Townsend, and Nicolas Zhang
Cross-border payments can be slow, expensive, and risky. They are intermediated by counterparties in different jurisdictions which rely on costly trusted relationships to offset the lack of a common settlement asset as well as common rules and governance. In this paper, we present a vision for a multilateral platform that could improve cross-border payments, as well as related foreign exchange transactions, risk sharing, and more generally, financial contracting. The approach is to leverage technological innovations for public policy objectives. A common ledger, smart contracts, and encryption offer significant gains to market efficiency, completeness, and access, as well as to transparency, transaction and compliance costs, and safety. This paper is a first step aiming to stimulate further work in this space.
Nadine Schwarz, Ke Chen, and Maksym Markevych

different purposes. For instance, a token can be used as a digital means of exchange, digital investment, or a resource. Regardless of the classification, the main functionality of tokens on a DLT is to enable parties to conduct operations, whether these refer to services, goods, or financial instruments, with the token acting as an independent representation of those services, goods, or financial instruments (See notably IMF Fintech Note: Keeping Pace with Change: Fintech and the Evolution of Commercial Law [TO BE PUBLISHED]). Tokens are also not necessarily limited to

International Monetary Fund

.” International Monetary Fund , Washington, DC . Garrido , J. M. , Y. Liu , J. Sommer , and J. S. Viancha . 2022 . “ Keeping Pace with Change: Fintech and the Evolution of Commercial Law .” Fintech Note 2022/001 , International Monetary Fund , Washington, DC . [ Link ] Goldstein , A . 2021 . “ Stablecoins: How Do They Work, How Are They Used, and What Are Their Risks?” Written Testimony of Director of Financial Policy, Open Markets Institute before the Committee on Banking, Housing, and Urban Affairs, United States Senate, December 14 . [ Link

Cristina Cuervo, Jennifer Long, and Richard Stobo

Emerging Markets – Easy Come, Easy Go , Monetary and Capital Markets Department Global Financial Stability Notes No. 2021/05 . Washington, DC , December . International Monetary Fund (IMF) . 2021f . Strengthening the Climate Information Architecture . Staff Climate Note 2021/003 . Washington, DC , September International Monetary Fund (IMF) . 2022a . Keeping Pace with Change: Fintech and the Evolution of Commercial Law . FinTech Note No. 22/01 . Washington, DC , January . International Monetary Fund (IMF) . 2022b . Blockchain Consensus Mechanisms