Can cryptocurrencies expand economic inclusion? – GIS reports


Despite the current market turmoil, cryptocurrencies offer policymakers the opportunity to dramatically expand global economic inclusion.

A currency trader counts wads of naira notes to trade in the informal market in Lagos, Nigeria. Some 1.7 billion people worldwide do not have access to banking services from traditional financial institutions. ©Getty Images

In a word

  • Crypto Still Holds the Potential to Improve Global Economic Mobility
  • Conventional payment systems may favor those within
  • Countries harmonizing relevant policies will cultivate the businesses of the future

A world turned upside down economic turmoil, sociopolitical risks, pandemics and climate change is not likely to be repaired with the same institutional approaches that have brought us here. Nor will solutions be found in national retreat, as no single country can tackle inherently extraterritorial, fast-paced and interrelated challenges alone.

A potential silver lining for global economic prosperity – opportunities to expand the perimeter of financial inclusion using cryptocurrencies – is often dismissed because the concept itself is misunderstood and evokes fear. But even now, amid deep market turmoil and a steep decline in the value of crypto, all that is needed to deliver a more inclusive global financial system is to responsibly connect the dots.

These dots cannot be connected simply by using Central Bank Digital Currencies (CBDCs). At best, these tools are an innovation in domestic payments that masks the lack of real-time gross settlement (RTGS) systems; at worst, these are taxpayer-supported financial experiments plagued by complex risks. Instead, the dots are connected by digital dollar currencies, better known as stablecoins.

Financial inclusion

The prevalence of financial frictions – caused by antiquated monetary transmission rails and duopolistic global payment and value transfer networks – is holding back the global economy. This value-destroying obstacle makes it’s expensive to be poordemanding the highest costs from those who can least afford it.

For example, what can be done about the yawning financial inclusion gap of over 1.7 billion people, if the traditional banking sector has reached a point of diminishing returns? How can the bottom rung of economic mobility be made more accessible, when a prerequisite for moving up the ladder is identity verification, but more than a billion people around the world are born in the shadows? What can restore the sustainability, even in times of recession, of cross-border payments? Remittances are the steering wheel of economic developmentdiaspora populations often doing more for their loved ones and countries of origin than development aid and foreign direct investment.

Emerging forms of internet-based money should not be viewed as a challenge to monetary sovereignty and financial stability.

Similar questions hang over commercial banking activities that jeopardize emerging and developing countries, and risk reduction standards that increase the cost of capital, trade and commerce. Just as many payment systems around the world are walled gardens favoring those within, the boundaries of economic prosperity must also be redrawn.

The emerging forms of internet-native money should not be seen as a challenge to monetary sovereignty and financial stability, but rather as a source of optionality and competitiveness in a world with too few good choices. Proponents of CBDCs often claim that unless central banks evolve for the digital age – potentially blurring the lines between macro-level monetary policy and micro-level retail banking – they will be left behind, crushed. by big technologies or jeopardized by a race for the digital monetary space. between potentially hostile nations.

By trying to keep big tech at bay and push back the technological decentralization that may present some (albeit minimal) risks to financial crime compliance and enforcement of sanctions, some countries have avoided free market principles. Others erred on the side of caution – hedging their bets in the digital currency race by half-heartedly allowing a free market, while weighing central bank-led digital currency options despite the obvious risks.

In code we trust

Regardless of the form or issuer of money today, the presumption of privacy for the use of digital currency, as well as its high-trust, low-cost transmissibility, will depend on two Web3 technological advances: public-key cryptography and open-source public blockchains. Fortunately, like the hardware and software that powers the internet, blockchains and crypto will eventually fade into background as the concepts and their results come to the fore.

The “crypto” in “cryptocurrency” refers to cryptography, the same technological approach that provides privacy in our digital lives as well as the scarcity and uniqueness of these emerging assets that are now rising in value. New forms of peer-to-peer value transfer networks are both an anti-sovereign conundrum and a pro-democratization development. They view financial inclusion as a human right, especially in a world where low-cost internet-connected devices are proliferating.


Facts and figures

Top 10 stablecoins, by market capitalization

These are the dots that are now organically connected, giving rise to a world of device-centric banking and payments and software-mediated financial markets. Connecting them further should not be seen as too risky for regulators, central banks and policymakers, but a task to be embraced and accelerated. Indeed, many jurisdictions that were once antagonistic to crypto are realizing the job creation benefits of providing the “internet of value” a physical home.

No phase in the evolution of money is without risk. Past era changes allowed the transition from informal trucking and barter to the gold standard and eventually the Bretton Woods system. Today, with widespread access to technology (though still subject to a global postcode lottery), combined with mobile internet, society’s faith in money will soon change. If digital species could be engraved, a suitable currency would read In code we trust.



According to some estimates, more than 200 million people participate in the crypto economy. The prevalence of open-source mobile digital wallets supporting a wide range of crypto assets has created global banking and payment networks in over 190 countries. Like the Internet itself, the Cambrian explosion of what some call the third generation of the web (Web3) can have both positive and negative consequences.

When the movement of money collides with the Internet and rolls ever-changing, open-source financial railsthere is a rare chance of bending the bow of Moore’s Law in favor of humanity. To do this, while seeking a balance between inclusion, responsible innovation and the integrity of the financial system, deep cross-sectoral collaboration is necessary.

Building on the experience of mobile money networks – arguably the prototypes of the innovations we see with digital wallets – as well as an increasingly robust and well-regulated digital asset value chain, the opportunity of more inclusive finance can no longer be ignored. On the contrary, countries that harmonize policy and regulation of digital assets could very well cultivate the tech companies of the future – and become the first to truly lower the bottom rung of economic mobility.


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