## Making The Digital Money Revolution Work for All _IMF Blog, July 29, 2021_ ## Source details **Canonical URL:** [Making The Digital Money Revolution Work for All](https://www.imf.org/en/blogs/articles/2021/07/29/making-the-digital-money-revolution-work-for-all) ## Other formats - [Markdown version](/en/blogs/articles/2021/07/29/making-the-digital-money-revolution-work-for-all/index.md) - [Structured JSON version](/en/blogs/articles/2021/07/29/making-the-digital-money-revolution-work-for-all/index.json) - [Bundle manifest](/en/blogs/articles/2021/07/29/making-the-digital-money-revolution-work-for-all/bundle-manifest.json) ## Bibliographic details - Authors: Tobias Adrian, Tommaso Mancini-Griffoli - Published: July 29, 2021 --- ### Overview - Authors: Tobias Adrian, Tommaso Mancini-Griffoli - Publication date: July 29, 2021 - Central thesis: Digital money innovations can transform payments, inclusion, efficiency, and cross-border flows, but immediate policy action is required to manage tradeoffs and risks and to ensure benefits are widely shared. ### Digital money: types and recent trends - Digital forms of money include: - Central bank digital currencies (CBDC) — publicly issued digital cash (not necessarily offering the same anonymity to avoid illicit transfers). - eMoney (example: Kenya’s mobile money transfer service MPesa). - Stablecoins (digital tokens backed by external assets, examples: USD-coin and the proposed Diem). - Cryptoassets (example: Bitcoin) — described as unbacked and highly volatile. - Adoption and market movements: - CBDCs are being closely analyzed, piloted, or likely to be issued in at least 110 countries. - Stablecoins tripled in value in the last six months (from $25 billion to $75 billion). - Cryptoassets doubled (from $740 billion to $1.4 trillion). - eMoney accounts are growing much more rapidly in low- and middle-income countries than in rich ones; Africa is highlighted as a leader. ### Opportunities from digital money - Increased payment efficiency and lower costs for transfers, including cross-border payments. - Financial inclusion: people without bank accounts can save securely and build transaction histories to access micro-loans. - New use cases: programmable money to serve specific purposes; integration with financial and social media applications. - Government efficiencies: more transparent and efficient taxation and redistribution; streamlined welfare disbursements. - Business efficiencies: faster settlement for asset purchases; cheaper and instant payments for artisans and firms. ### Policy implications, tradeoffs, and risks - International monetary system: - Design and regulation of digital money must preserve governments’ ability to stabilize prices (control monetary policy) and stabilize exchange rates (control capital flows). - Payment systems should grow increasingly integrated among countries and avoid fragmentation into regional blocs. - Avoiding a digital divide is essential so benefits are not concentrated and others left behind. - Stability and availability of cross-border payments are important for international trade and investment. - Domestic economic and financial stability: - Public and private sectors should collaborate to provide money to end-users while ensuring stability and security without stifling innovation. - Banks may face pressure as specialized payment companies compete for customers and deposits; credit provision must be sustained during transitions. - Fair competition must be upheld amid large technology companies entering payments. - Digital money can be leveraged to facilitate welfare transfers and tax payments and to lower costs of access to payment and savings services. - Trust, safety, and integrity: - New forms of money must protect consumers’ wealth, be safe, be anchored in sound legal frameworks, and avoid facilitating illicit transactions. ### Urgency and risks of inaction - Policy action must begin immediately to establish a common vision for the international monetary system, strengthen international collaboration, and enact legal and regulatory frameworks that drive inclusive innovation. - Regulation, market structure, product features, and the role of the public sector can quickly ossify around less desirable outcomes; reversing course later can be very costly. ### IMF role and recommended actions - Mandate: help ensure widespread adoption of digital money fosters domestic economic and financial stability and the stability of the international monetary system. - Planned IMF actions: - Engage regularly with country authorities to evaluate country-specific policies. - Provide capacity development to avoid a digital divide. - Develop analytical foundations to identify policy options and tradeoffs. - Deepen expertise, widen skillsets, ramp up resources, and leverage near universal membership. - Collaboration: work closely with the World Bank, the Bank for International Settlements and its Innovation Hub, international working groups and standard-setting bodies, and national authorities to address complex, multifaceted challenges. ### Key statistics and factual highlights - CBDCs: being analyzed, piloted, or likely to be issued in at least 110 countries. - Stablecoins: grew from $25 billion to $75 billion (tripled) in six months. - Cryptoassets: grew from $740 billion to $1.4 trillion (doubled). - Geographic trend: eMoney accounts are growing faster and are now more numerous in low- and middle-income countries than in rich countries; Africa is leading in adoption. *Making The Digital Money Revolution Work for All — Tobias Adrian, Tommaso Mancini-Griffoli, July 29, 2021* --- ## References - [one on the new policy challenges](https://www.imf.org/en/Publications/Policy-Papers/Issues/2021/07/28/The-Rise-of-Digital-Money-462914) - [one on an operational strategy for the Fund](https://www.imf.org/en/Publications/Policy-Papers/Issues/2021/07/28/The-Rise-of-Public-and-Private-Digital-Money-462919) _Source: https://www.imf.org/en/blogs/articles/2021/07/29/making-the-digital-money-revolution-work-for-all_