Public payment systems in the digital era: Responding to the financial stability and security-related risks of cryptocurrencies



The digital era is leading to many changes in the payment system landscape, some of which threaten monetary stability and security in developing countries.

To ensure that payment systems function as a public good, monetary authorities should carefully consider the implementation of a central bank digital currency.

Depending on national capabilities and needs, and the challenges of creating such a currency, authorities could alternatively create a fast retail payment system. Moreover, given the risk of accentuating the digital divide in developing countries, authorities should maintain the issuance and distribution of cash.
 

Key points:

  • To mitigate the financial stability and security-related risks of cryptocurrencies, monetary authorities should provide digital payment options, to ensure that national payment systems function as a public good in the digital era.
     
  • In cases where digital payment streams are not readily available to households, monetary authorities should carefully consider the implementation of a central bank digital currency or fast retail payment system, depending on national capabilities and needs.