What do digital advantages mean for emerging markets and nation-building?

As cash flow and banking transactions have become important tools for global payments, business and economic development (EMDE) has faced a number of challenges. The level of competition is negative. the price. New digital benefits strategies aim to fill these gaps, and some EMDE officials have also started measuring the costs and benefits of digital banking institutions (CBDCs). On October 29, 2021, the Financial Institutions for International Conference (BIS) published this article on the materials and needs that shape new and emerging markets. be announced. . .

introduction

In recent years, physical cash and bank transactions have become important tools for global payments (Bech et al., 2018). . Bank accounts offer greater security compared to physical cash, support remote transactions, and allow banks to expand other financial services, thereby improving business performance.

However, for consumer markets, particularly in the EMDE region, banking investments constitute at least three major challenges.

First of all, you will need a bank account. Although the number of funds has increased (Figure 1, left), it is not yet available worldwide. Electricity bills have worked to solve this problem, but in countries where bank accounts and bills are not yet available, the poor have to rely too much on money. “Ghost market”), banks and less digital countries, such as electronic money, are more unreliable (Figure 1, right).

Second, despite the improvement in recent years, many financial institutions in the EMDE region face very little competition (Figure 2, left). The strength of this economy often leads to higher incomes, that is to say more expensive financial services (Chart 2, policy). At the same time, this feeling can lead to new awakenings.

Third, many families in the EMDE region depend on small remittances around the world from family members working overseas. Global remittances to the EMDE region in 2019 amounted to $ 551 billion, more than three times the funding for growth. ; Figure 3, left). There are Money Transfer Experts (MTOs) who can provide quick returns and lower the cost of on-time returns. However, the average price of US $ 200 per mobile home is still around US $ 14 (World Bank, 2019; Figure 3, policy). In cross-border remittances, small businesses, small businesses and individuals participating in cross-border exchanges face higher costs and longer waiting times than large providers.

New technologies such as cryptocurrency and securities have been designed to cope with the scarcity of existing funds.. However, as the G7 and FSB have pointed out, a stable coin carries a number of risks, including legitimacy, financial justice, good governance, good governance and good governance. protect consumers, personal information, tax compliance, potential financial policy, and financial security. Working group, 2019, FSB, 2020).

Recently,Many central banks have announced or tested central bank digital currencies (CBDCs)., CBDC will become a new form of digital central bank money. Although different models can be adopted in technology and design, CBDCs have been digitally shaped by mid-sized banks. Recent research has shown that regional banks, which represent around one-fifth of the world's population, are likely to announce CBDCs in the next few years. . For EMDE central banks, CBDC leaders can take charge of financial consolidation and payroll operations, which also allows broad support for the dissemination of CBDCs.

In most cases, however, so far, numerical results in the form of new technologies have not yet reached the stage of large-scale measurement, and it is too early to determine whether they can provide better results. solutions to improve existing payments. These technologies continue to grow rapidly and the impact they will have on policies will depend on "who" and how they are launched. In this perspective, many competition policies must be addressed.

Events determine whether digital benefits will be provided in the EMDE region

to supply

Many external devices support the deployment of stable funds or CBDCs in EMDEs. The following table describes these situations, including communication and digital development for broadcast CBDCs. Digital asset providers compare themselves to conventional coverage providers. The public sector hopes to improve housing finances, security of payments and accounting, as well as pricing standards.

need value

From a practical standpoint, technology is changing the way consumers shop. They hope that payment platforms will first be mobile and fully digital. In the EMDE region, consumers expect cell phones and cell phone users to provide coverage and deposit (Petralia et al., 2019). Digital advantages can lower the cost of trading across borders and increase the speed and transparency of trade. As a result, there may be greater demand for digital services in countries where prices are still high and cross-border payments are slow or unpredictable.

In addition, public confidence in existing financial institutions and macroeconomic operations and businesses also affects the attractiveness of CBDCs in the region.

Special challenge EMDE

In the EMDE, some of the legal problems associated with fixed currency have increased and the authorities face six major challenges: development, macroeconomics and cross-border. Table 3 lists the 6 main challenges.

First, rigid processes can pose a significant risk to the integrity of the global economy., including AML / CFT (FATF, 2019a). Stablecoin systems must comply with FATF standards to reduce their risk of fraudulent transactions. Currently, most stable accounts cannot be associated with an "account" with a real ID. As many markets emerge on a peer-to-peer basis without the use of Virtual Real Estate (VASP) or other financial markets, concerns about the integrity of financial and management decisions arise. Although these risks exist in all countries, the restrictions can make it difficult for EMDE officers to enforce and enforce policies and procedures. EMDE agents may also face challenges in tracking and preventing financial fraud.

Second, financial security, such as a bank without a bank or e-money network, must provide “cash deposits and withdrawals” operating on securities and via the Internet to Yam.Most local EMDE businesses have yet to embrace digital payments.It is a challenge if the distributed network is unable to store encrypted assets or secure business results, has no security cover, or is vulnerable to cyber attacks.

Third, a stable currency or basket of foreign currencies is largely due to the divergence of local currencies in the EMDE region.This affects the use of fixed coins in daily payments, as all prices remain in the local currency except in the most severe cases. While fixed yields apply to debt securities, it is a new form of foreign currency borrowing (FX), which has been at the heart of many financial problems in the EMDE region.

Fourth, financial security can affect fiscal policy in EMDE countries and increase risk.In extreme cases, countries facing political, economic and financial difficulties may face bank deposits and cash outflows. This can lead to instability and reduce the effectiveness of the policy. Countries with a fixed currency border crossing may find it difficult to regulate the overall value of fiat currency. It also affects the performance of forex and the banking sector, and the potential for income and redemptions can have a significant impact.

Fifth, given the many responsibilities discussed above, many organizations within a stable system work together to streamline the entire process to provide smooth and efficient services. so,Overflow and overflow damage may occur.. This requires careful research and risk mitigation review. When legal entities operate under different jurisdictions, this oversight can be affected by cross-border issues. It can be difficult for EMDEs to improve regulatory processes, benefit from appropriate oversight, and allocate the necessary resources to form cross-border collaborations.

Sixth, comprising payment, scale, network and 'winning' intervention, EMDE acts as a 'host' for stable organizations, providing key services such as administration and management of real estate, when the head office has been moved elsewhere. . EMDE residents can also rely on VASP exchanges across borders and services such as exchanges or wallets and avoid "owner" surveillance. thisIt may be necessary to provide additional tools to the “owner” administration to monitor VASPs across borders providing products or services in their jurisdiction., as the FATF has done in the revised rules.

Therefore

The difference between a bank account and a non-bank account is important. Since bankruptcy was made public, CBDCs are completely different from securities and crypto securities. Some things make them similar, but their impact can be very different. For EMDE, a new form of digitization can bring unique, macroeconomic and cross-border improvements. However, technological advancements made from existing finance have increased financial performance and efficiency in emerging markets and developed countries. Overall, perhaps the most important new digital personal money service to date has paid more attention to the issues faced by EMDEs and the financial accounting of cross-border payments and remittances.