Dig­i­tal cur­ren­cies and cryp­tocur­ren­cies

The UB Post - - Business & Economics -

Mon­gol Bank has launched a cam­paign called “Dig­i­tal pay­ments in a dig­i­tal era” in or­der to pro­mote the wide­spread adop­tion of dig­i­tal cur­ren­cies and pay­ments. Se­nior Spe­cial­ist at the Pay­ment Systems Depart­ment at Mon­gol Bank A.Bat­saikhan dis­cussed the new ad­vance­ments in­clud­ing dig­i­tal cur­ren­cies in the coun­try’s fin­tech ser­vices.

What has been a re­cent promi­nent area of de­vel­op­ment in in­ter­na­tional fi­nance?

One sub­ject that has been gar­ner­ing much at­ten­tion in in­ter­na­tional fi­nance is un­doubt­edly cryp­tocur­ren­cies and the foun­da­tional blockchain tech­nol­ogy it is based on. There is an op­por­tu­nity to use this tech­nol­ogy in the pay­ment sys­tem. Many cen­tral banks are con­duct­ing stud­ies and ex­per­i­ments on us­ing blockchain in their pay­ment sys­tem. For ex­am­ple, Sin­ga­pore’s cen­tral bank con­ducted a long ex­per­i­ment to adopt blockchain tech­nol­ogy in its pay­ment sys­tem and re­cently pub­lished a re­port on it.

The re­port said that the tech­nol­ogy of blockchain is too new at the mo­ment and the ad­van­tages of us­ing the tech­nol­ogy are not suf­fi­cient cur­rently. The costs are par­tic­u­larly high, there­fore it will not be adopted in the pay­ment sys­tem. But since the tech­nol­ogy is rapidly de­vel­op­ing, the cen­tral bank said it will con­tinue its ex­per­i­ments and un­der­lined that there may come a day where it will be widely adopted.

What is Mon­go­lia’s pol­icy on cryp­tocur­ren­cies?

Mon­gol Bank and the Fi­nan­cial Reg­u­la­tory Com­mis­sion (FRC) have twice re­leased state­ments warn­ing of the po­ten­tial dangers of cryp­tocur­ren­cies. The cen­tral bank warned the pub­lic that there have been many in­stances where peo­ple have lost money due to the volatile na­ture of in­vest­ing in cryp­tocur­ren­cies. In ad­di­tion, the FRC an­nounced that cryp­tocur­ren­cies are not a le­gal ten­der in Mon­go­lia. The law states that all trans­ac­tions for goods, ser­vices, and em­ploy­ment must be made in tu­grug. Any prices prod­ucts, ser­vices, and em­ploy­ment must be stated in tu­grug. This es­sen­tially means that a per­son can­not pay for a prod­uct at a store with bit­coin, it would be il­le­gal.

Since many coun­tries are al­ready im­ple­ment­ing th­ese tech­nolo­gies in some way, what should our pol­icy be on it mov­ing for­ward?

As cryp­tocur­ren­cies and blockchain tech­nol­ogy use is de­vel­op­ing all around the world, Mon­gol Bank is closely watch­ing the de­vel­op­ments. But that does not mean the cen­tral bank is sit­ting idly. We have al­ready set up a work­ing group to re­search about the use of blockchain tech­nol­ogy and the first re­port pro­duced by the group has been pre­sented to the ad­min­is­tra­tion of the cen­tral bank.

In ac­cor­dance to the law, cryp­tocur­ren­cies can­not be used for pay­ment but there is an op­por­tu­nity to use them for in­vest­ment. How­ever, this is­sue does not con­cern the na­tional pay­ment sys­tem, there­fore Mon­gol Bank can­not act on this is­sue uni­lat­er­ally.

Some busi­nesses have al­ready be­gun is­su­ing their new dig­i­tal cur­ren­cies. For ex­am­ple, the dig­i­tal cur­rency Candy is al­ready in use. What is the ad­van­tage that th­ese dig­i­tal cur­ren­cies will of­fer?

Mob­i­fi­nance re­ceived per­mis­sion to is­sue its Candy dig­i­tal cur­rency from Mon­gol Bank. This is unique in that it was the first li­cense pro­vided by the cen­tral bank to is­sue a dig­i­tal cur­rency. From the con­sumer side, dig­i­tal cur­ren­cies have the same value and uses as a phys­i­cal tu­grug bill. Dig­i­tal cur­ren­cies of­fer the ad­van­tage of be­ing easy to trans­fer from any­where and also re­duces the risk of over­spend­ing. It is very easy to regis­ter to be­come a user. It is easy as send­ing a text mes­sage. There are no hur­dles like phys­i­cally meeting with a rep­re­sen­ta­tive and sign­ing a con­tract. On the busi­ness side, com­pa­nies will have the op­por­tu­nity to es­tab­lish a con­tract with the dig­i­tal cur­rency is­suer and ac­cept said dig­i­tal cur­rency for pay­ment. This is ad­van­ta­geous in that it does not re­quire the seller to pur­chase any new equip­ment or pay reg­is­tra­tion fees. In ad­di­tion, the time and ef­fort put into stor­ing or trans­port­ing phys­i­cal bills will be re­duced sig­nif­i­cantly. Sell­ers will only pay a small fee on ev­ery trans­ac­tion.

One candy is equal to one MNT. How would a per­son ac­quire a dig­i­tal cur­rency like Candy?

In the case of Candy, a user would have to pay what­ever amount in tu­grugs to re­ceive an equal amount in dig­i­tal cur­ren­cies. Es­sen­tially, a con­sumer will trade in their MNT for Candy. Many stores and restau­rants have al­ready be­gun to ac­cept Candy.

How will con­sumers be pro­tected from any risks involving dig­i­tal cur­ren­cies?

The ser­vice of dig­i­tal cur­ren­cies will not only be lim­ited to banks, all in­di­vid­u­als and com­pa­nies will have the op­por­tu­nity to re­ceive au­tho­riza­tion to op­er­ate a dig­i­tal cur­rency. As a re­sult, the re­quire­ments and stan­dards im­posed on an op­er­a­tor of a dig­i­tal cur­rency is very high. The pro­ce­dure clearly states what must be in­cluded in the con­tracts be­tween a dig­i­tal cur­rency op­er­a­tor and a user, con­tracted rep­re­sen­ta­tives, and or­ga­ni­za­tions that will rec­og­nize and use the cur­rency.

An op­er­a­tor of a dig­i­tal cur­rency must have an equal amount of money stored in the bank ac­count as a sort of col­lat­eral. For in­stance, if an op­er­a­tor has is­sued one mil­lion dig­i­tal cur­rency units, they must have 100 per­cent of one mil­lion MNT in their bank ac­count. This al­lows the fi­nal con­sumer of the dig­i­tal cur­rency to be pro­tected from all risks. All of this is meant to pro­tect the users of dig­i­tal cur­ren­cies.

What are the law, rules and pro­ce­dures used to reg­u­late for­eign and do­mes­tic pay­ments and trans­fers. Is it the job of Mon­gol Bank to reg­u­late this?

In ac­cor­dance to the law, any pay­ments and trans­fers made within Mon­go­lia are reg­u­lated by the cen­tral bank. How­ever, our na­tional laws do not af­fect any out­go­ing in­ter­na­tional trans­fers. All banks have an in­ter­na­tional net­work or a cor­re­spon­dent bank to con­duct for­eign trans­fers. Th­ese chan­nels are used to con­duct for­eign pay­ments and trans­fers, there­fore Mon­gol Bank does not have author­ity over th­ese kinds of trans­fers.

Re­cently, there have been rapid de­vel­op­ments such as on­line in­ter­na­tional forex ser­vices. How ready is Mon­gol Bank in terms of pol­icy for th­ese types of changes and ad­vance­ments in fi­nance?

The new amended ver­sion of the Law on Na­tional Pay­ment Sys­tem came into ef­fect this year. This leg­is­la­tion al­lows fi­nan­cial or­ga­ni­za­tions out­side of banks to par­tic­i­pate in the pay­ment sys­tem. One of the first steps of this was the ap­proval of the rules and pro­ce­dures on dig­i­tal cur­ren­cies, this al­lows non-bank­ing fi­nan­cial in­sti­tu­tions and even lim­ited li­a­bil­ity com­pa­nies to is­sue dig­i­tal cur­ren­cies. Mov­ing for­ward, Mon­gol Bank is fo­cused on re­search­ing and find­ing ways in which non-bank­ing in­sti­tu­tions can be fur­ther in­volved in the pay­ment sys­tem.

Newspapers in English

Newspapers from Mongolia

© PressReader. All rights reserved.