Digital Currencies and CBDC Impacts on Least Developed Countries

AIIFL | UNDP – UNCDF Technical Paper 1.2

Digital Currencies and CBDC Impacts on Least Developed Countries by Katherine Foster, Sofie Blakstad, Sangita Gazi and Marijn Bos :: UNDP-UNCDF Technical Paper 1.2

Executive Summary: The purpose of this Technical Paper is to garner a more robust understanding of the potential macroeconomic impacts and related regulatory challenges of central bank digital currencies (CBDCs) and other digital currency initiatives on developing countries. This paper begins from a point of recognition that the landscape of digital currencies, their associated taxonomy as well as related regulations are still evolving alongside their potential implications. As such, we focus on the different types of digital currencies previously in circulation, delineating these from those on the near and immediate horizon. We employ an umbrella definition to encompass CBDCs and digital ledger technology (DLT)-based currencies including stablecoins, as well as earlier versions of digital money, as subsets of digital currency to examine the evolution of macroeconomic impacts on developing countries as well as the emerging regulatory gaps. We cluster key elements and draw assumptions
across common parameters in research, for the sake of consistency and to retain the focus on advancing the understanding of the broader macroeconomic impacts on least developed countries (LDCs). Download the paper to continue reading