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Central Bank Digital Currencies a Useful Tool for Emerging Markets, but are not Without Risks

Amy Liu

Summary: Emerging market countries have been front runners in the adoption of digital currency projects, which could boost financial inclusion, according to a new report. However, countries adopting digital currencies face risks, such as increasing digital dollarisation as they gain access to other countries and a potential rise in local inflation rates, according to BofA Securities. ...

Emerging market countries have been front runners in the adoption of digital currency projects, which could boost financial inclusion, according to a new report.

However, countries adopting digital currencies face risks, such as increasing digital dollarisation as they gain access to other countries and a potential rise in local inflation rates, according to BofA Securities.

In countries where dollarisation rates are currently low, the adoption of CBDCs will not make much difference. But in countries where it is high, easier access will increase the process – a phenomenon known as “digital dollarisation”.

By Amy Liu

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Link: Central Bank Digital Currencies a Useful Tool for Emerging Markets, but are not Without Risks   [Copy]
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