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

In: The Palgrave Handbook of Technological Finance


  • Erik Feyen

    (World Bank Group)

  • Jon Frost

    (Bank for International Settlements)

  • Harish Natarajan

    (World Bank Group)

  • Tara Rice

    (Bank for International Settlements)


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.

Suggested Citation

  • Erik Feyen & Jon Frost & Harish Natarajan & Tara Rice, 2021. "What Does Digital Money Mean for Emerging Market and Developing Economies?," Springer Books, in: Raghavendra Rau & Robert Wardrop & Luigi Zingales (ed.), The Palgrave Handbook of Technological Finance, pages 217-241, Springer.
  • Handle: RePEc:spr:sprchp:978-3-030-65117-6_9
    DOI: 10.1007/978-3-030-65117-6_9

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    References listed on IDEAS

    1. Listfield, Robert & Montes-Negret, Fernando, 1994. "Modernizing payment systems in emerging economies," Policy Research Working Paper Series 1336, The World Bank.
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    Cited by:

    1. Sally Chen & Tirupam Goel & Han Qiu & Ilhyock Shim, 2022. "CBDCs in emerging market economies," BIS Papers, Bank for International Settlements, number 123.
    2. Di Casola, Paola & Habib, Maurizio Michael & Tercero-Lucas, David, 2023. "Global and local drivers of Bitcoin trading vis-à-vis fiat currencies," Working Paper Series 2868, European Central Bank.
    3. Feyen,Erik H.B. & Kawashima,Yusaku & Mittal,Raunak, 2022. "Crypto-Assets Activity around the World : Evolution and Macro-Financial Drivers," Policy Research Working Paper Series 9962, The World Bank.

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    More about this item


    Fintech; Stablecoins; Crypto-assets; E-money; Central bank digital currencies; Emerging market and developing economies; Financial inclusion; Remittances; Payments;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes


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