What does digital money mean for emerging market and developing economies?

Erik Feyen, Jon Frost, Harish Natarajan and Tara Rice

No 973, BIS Working Papers from Bank for International Settlements

Abstract: Proposals for global stablecoins have put a much-needed spotlight on deficiencies in financial inclusion and cross-border payments and remittances in 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 that are built on or improve the existing financial plumbing may address many of the issues in EMDEs 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)
JEL-codes: E42 E51 E58 F31 G28 O33 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2021-10
New Economics Papers: this item is included in nep-cba, nep-cwa, nep-fdg, nep-fle, nep-mac, nep-mon and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Chapter: What Does Digital Money Mean for Emerging Market and Developing Economies? (2021)
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