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The Financial Stability Board (FSB) published a report that explores potential factors driving the higher level of activities related to foreign currency-pegged stablecoins in emerging market and developing economies (EMDEs), the associated financial stability risks and regulatory challenges, and provides considerations to address them. EMDEs may be exposed to macro-financial risks arising from the use of foreign currency pegged global stablecoins, which can increase financial stability risks by destabilizing financial flows and straining fiscal resources.

The Alliance for Financial Inclusion (AFI) published a report that evaluates the extent to which retail central bank digital currency (CBDC) can advance financial inclusion in emerging market and developing economy (EMDE) countries. It concludes that, retail CBDC can be designed to alleviate identity gaps, and mobile phone and digital access divides through its unique ability to generate digital identity proxies and enable offline capabilities while being device agnostic. However, CBDC will not automatically advance financial inclusion, and if not designed appropriately, could reinforce existing barriers. Also, in many EMDE jurisdictions, they are likely to be limited by poor electricity coverage, access to (and affordability of) CBDC-enabled devices and limited cash-in and cash-out infrastructure. Finally, the report concludes that CBDC may not always be the right tool for addressing financial inclusion in different EMDE country contexts relative to other digital payment interventions. The unique feature of CBDC, which makes it distinct from other digital payments instruments, is that is issued by the central bank. But this feature does not necessarily make CBDC a better tool.

This VoxEU/CEPR article argues that there is no obvious justification for retail central bank digital currency (CBDC) in most advanced economy (AE) jurisdictions where a large share of the population has access to bank accounts. From a user perspective, such CBDC do not seem attractive enough to compete successfully with private bank deposits and private retail payment systems like PayPal. The key advantage of CBDC, its absolute safety, is irrelevant for retail payments. However, for emerging and developing economies (EMDEs), retail CBDC could be a suitable tool to approach the problem of a large share of the population being unbanked. However, in both AE and EMDE jurisdictions, there is a huge potential for wholesale CBDC as a store of value for retail payment service providers.

A Financial Stability Board (FSB) report found that the expansion of BigTech firms in financial services in emerging market and developing economies (EMDEs) has generally been more rapid and broad-based than that in advanced economies. Lower levels of financial inclusion in EMDEs create a source of demand for BigTech firms' services, particularly amongst low-income populations and in rural areas where populations are under-served by traditional financial institutions. This has been supported by the increasing availability of mobile phones and internet access.

A chapter from the IMF's forthcoming Global Financial Stability Report concludes that tougher regulation is needed to prevent the rapid growth in crypto-assets leading to financial instability, defrauding of consumers and the funding of terrorism. The chapter drew particular attention to the widespread and rapid adoption of crypto-assets in emerging markets and developing economies (EMDEs), which could "pose significant challenges by reinforcing dollarization forces in the economy - or in this case cryptoization - where residents start using crypto-assets instead of the local currency, reducing the ability of central banks to effectively implement monetary policy... [In such cases] authorities should prioritize strengthening macroeconomic policies and consider the benefits of issuing central bank digital currency and improving payment systems. In some EMDEs, cryptoization can be driven by weak central bank credibility, vulnerable banking systems, inefficiencies in payment systems and limited access to financial services... [Also,] globally, policymakers should prioritize making cross-border payments faster, cheaper, more transparent and inclusive through the G20 Cross Border Payments Roadmap."

This SUERF Policy Brief presents the key findings of the annual BIS survey of central banks about their engagement in central bank digital currency (CBDC) and it discusses these findings in the context of cross-border payments. As in previous years, the motivations to consider issuing a CBDC differ between AE and EMDE central banks and between retail and wholesale CBDCs. Overall, the retail CBDC work in AEs is driven mainly by domestic payments efficiency, payments safety and financial stability considerations. The same reasons are also important drivers for the retail CBDC work in EMDEs, however, their CBDC engagement is, above all, driven by financial inclusion-related motivations.

The European Central Bank (ECB) published a paper that analyzes the drivers of Bitcoin transactions against 44 fiat currencies in the largest peer-to-peer crypto exchanges. The empirical results reinforce the hypothesis that Bitcoin trading is driven by speculative motives. However, Bitcoin seems to offer transactional benefits, in particular in emerging market and developing economy (EMDE) countries. The depreciation of the domestic currency of EMDEs - notably not of the currencies of AEs - induces more Bitcoin trading. This suggests that Bitcoin, despite its wide price fluctuations, might have been appreciated also as a store of value or medium of exchange in countries which experienced a loss in the the purchasing power of their domestic currency.

The BIS published a survey, carried out in late 2022, of 86 central banks on their views and plans regarding central bank digital currencies (CBDCs). 93% are engaged in some form of CBDC work and that the work on retail CBDC is more advanced than on wholesale CBDC. The results also indicate that emerging market and developing economies (EMDEs) are more advanced in their CBDC work than advanced economies (AEs). In addition, 80% of central banks surveyed see potential value in having both a retail CBDC and a fast payment system (FPS), because CBDC allows access to a wider set of financial institutions and the unbanked population. Also, programmability and offline payments were mentioned as features that an FPS may not provide.

The Reserve Bank of India (RBI) and the Bank for International Settlements Innovation Hub (BISIH) have launched the fourth edition of the G20 TechSprint, a global technology competition to promote innovative solutions aimed at improving cross-border payments. Developers from around the world should submit application from May 04, 2023 to June 04, 2023 and the TechSprint will conclude around August/ September 2023. The 2023 TechSprint will focus on AML/CFT/Sanctions technology solutions to reduce illicit finance risk, FX and liquidity technology solutions to enable settlement in emerging market and developing economy (EMDE) currencies, and technology solutions for multilateral cross-border CBDC platforms.

94% of the 86 central banks surveyed (between October 2023 and January 2024) by the Bank for International Settlements (BIS) are exploring central bank digital currency (CBDC). 54% are experimenting with proofs of concept and 31% are running a pilot. Around 30% of central banks focus on retail CBDCs only and 2% are working on wholesale CBDCs only, and it is more likely that central banks will issue a wholesale CBDC within the next six years than retail CBDC. More emerging market (EMDE) central banks are likely to issue a retail CBDC on a distributed ledger than advanced economy (AE) central banks, perhaps reflecting a willingness to leapfrog moving from legacy systems to cutting-edge technologies. Also, this year the survey also provides insight into the use of stablecoins for payments and regulatory approaches to crypto-assets across the globe.

The Cambridge Centre for Alternative Finance (CCAF) published its 2nd Global Crypto-Asset Regulatory Landscape Study. The report describes and compares emerging practices in crypto-asset regulation, focusing on 19 representative jurisdictions and encompassing key dimensions of regulatory frameworks. The objective is to identify areas of convergence and divergence in the implementation of regulatory frameworks. In the conclusion this study indicates, where possible, early lessons for financial authorities, particularly in emerging market and developing economy (EMDE) jurisdictions. The report is published alongside a global online tracker of crypto-asset regulatory frameworks, within the CCAF's Global Regulatory Innovation Dashboard (GRID).

The BIS published a paper that sheds light on how fast payment systems (FPSs) influence the diffusion of digital finance apps, based on a rich dataset on app downloads and use for 86,163 apps in 95 countries over 2012-22. It identifies various mechanisms through which FPS drive finance app adoption, like stimulating competition and innovation in payments, fostering digital finance adoption via learning effects and expanding access to financial services, particularly in emerging market and developing economies (EMDEs) and low income countries (LICs). This effect is particularly evident for apps by technological disrupters, such as fintechs or big techs, relative to those of incumbent financial institutions. Finally, we identify some characteristics of FPS that further amplify digital finance adoption such as the active role of the central bank, open membership and real-time settlement.

The Bank for International Settlements (BIS) Committee on Payment and Market Infrastructures (CPMI) published a brief that highlights key retail payment trends based on 2023 data collected from member jurisdictions. It demonstrates that the use, or volume, of cashless payment methods continued to grow in 2023 and that consumers increasingly choose to pay digitally for small value transactions. Although broad based, the growth in cashless payments was especially strong in emerging market and developing economies (EMDEs), driven by a sharp increase in the use of credit transfers (mostly fast payments) and e-money. It also finds that the uptake of fast payments is generally higher in jurisdictions with lower levels of cash in circulation and wider use of payment cards, especially for small payments. However, the demand for cash withdrawals generally remained stable compared with previous years.