What Does Digital Money Mean for Emerging Market and Developing Economies?

Erik Feyen (), Jon Frost, Harish Natarajan () and Tara Rice ()
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Erik Feyen: World Bank Group
Harish Natarajan: World Bank Group
Tara Rice: Bank for International Settlements

A chapter in The Palgrave Handbook of Technological Finance, 2021, pp 217-241 from Springer

Abstract: Abstract Proposals for global stablecoins have put a much-needed spotlight on deficiencies in financial inclusion, and in cross-border payments and remittances to emerging market and developing economies (EMDEs). Yet stablecoin initiatives are no panacea. While they may achieve adoption in certain EMDEs, they may also pose particular development, macroeconomic, and cross-border challenges for these countries and have not been tested at scale. Several EMDE authorities are weighing the potential costs and benefits of central bank digital currencies (CBDCs). We argue that the distinction between token-based and account-based money matters less than the distinction between central bank and non-central bank money. Fast-moving fintech innovations in EMDEs that are built on, or improve the existing financial plumbing may address many of the issues that both private stablecoins and CBDCs aim to tackle.

Keywords: Fintech; Stablecoins; Crypto-assets; E-money; Central bank digital currencies; Emerging market and developing economies; Financial inclusion; Remittances; Payments (search for similar items in EconPapers)
Date: 2021
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Working Paper: What does digital money mean for emerging market and developing economies? (2021)
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DOI: 10.1007/978-3-030-65117-6_9

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