Crypto assets and central bank digital currencies: Potential implications for developing countries

Monetary and financial systems have become exposed to privately issued digital representations of value with monetary characteristics that rely on encryption, such as distributed ledger technology, and are generally known as crypto assets.

The rapidly expanding crypto asset sphere comes mainly in two forms: Cryptocurrencies (e.g.Bitcoin) and Stablecoins (e.g. USD Tether).

This Policy Review aims at supporting developing country policymakers in their thinking about crypto assets.

Its main contribution is to provide an accessible, yet academically informed, discussion of the main implications of crypto assets for developing countries.

It asks four main questions:

  1. What are the trends and drivers of crypto adoption, and which developing countries have been concerned the most?
  2. What do the economics of crypto assets imply for the ease of payments, financial inclusion, privacy, illicit financial flows, and currency substitution, as well as the architecture of the IMS?
  3. How can regulation shape the evolution of crypto adoption and what solutions can Central Bank Digital Currencies and fast retail payment systems provide?
  4. Are the monetary, financial and payments systems in developing countries ripe for embracing crypto assets?