A framework for digital currencies for financial inclusion in Latin America and the Caribbean
Abstract
This paper provides a framework to assess the contribution of digital currencies to promote financial inclusion, informed by an analysis of the financial inclusion landscape and domestic and cross-border payment systems in Latin America and the Caribbean. It also provides key considerations from central banks in the region on possible implementations of a central bank digital currency. The findings show that although digital currency development is at an early stage for payments, a well-designed system could reduce the cost of domestic and cross-border payments, improve the settlement of transactions to achieve real-time payments, expand the accessibility of central bank money, incorporate programmable payments and facilitate monitoring of real-time transactional data and traceability of transactions.This article is also included in The Business & Management Collection which can be accessed at https://hstalks.com/business/.
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Author's Biography
Gabriel R. Bizama is a researcher at the University of Bern. Prior to this, he led the financial inclusion agenda at the Ministry of Treasury in Argentina, designing and implementing the National Financial Inclusion Strategy and the National Plan for Financial Education. He has also consulted for the World Bank and UN Development Programme on financial inclusion and FinTech. In the private sector, he supported the design of blockchain-based payment solutions at the Stellar Development Foundation.
Bernardo Paniagua is a research analyst at the Center for Monetary Studies in Latin America. His main focus is digital currencies in payment systems, particularly with blockchain technologies and the use of central bank digital currencies. He has previously studied applied mathematics and computational engineering at Instituto Tecnológico Autónomo de México.
Alex Wu is the Policy and Government Relations Manager at the Stellar Development Foundation. Prior to this, Alex worked at the Federal Reserve on an experimental retail central bank digital currency and payments initiative. He began his career in financial services at Société Générale. He holds a bachelor of science in mathematics and economics from New York University and a master of public policy from the University of Chicago.
Max Mitre is a research analyst at the Center for Monetary Studies in Latin America. He has a degree in mathematics from the Universidad de Sonora and a master’s degree in probability from the Centro de Estudios Avanzados del IPN (Cinvestav). His areas of interest are stochastics control, statistics and machine learning, along with their applications to economics and finance.
