Mamadou D. Barry, the IMF Resident Representative for The Gambia has recently stated that the use of stable-coins, albeit very limited before the pandemic, more than quintupled in value in 2021 from US$28.5 billion to US$158.6 billion, while crypto-assets tripled from US$763.3 billion to US$2.3 trillion across the globe.
The IMF chief continued that in Sub-Saharan Africa, the use of mobile money as a percentage of the population aged15 years and above, almost tripled between 2014 and 2021 going from 11.6% to 33.2%.
Speaking during the 44th Annual Meeting of the Assembly of Governors, Mr. Barry said the concept of digital money is not only diverse but also evolving swiftly, noting that includes publicly issued central bank digital currencies, which are digital forms of fiat money fully backed by the central bank and intended as legal tender.
However, he posited that the use of digital currencies would continue to grow with advancement in technology and increases in digital trade both at national and transnational levels. “Their adoption is already global and growing at a very fast rate, aided by the accelerated use of digital technology during the Covid-19 pandemic.”
Furthermore, he said based on IMF data, more than 110 countries around the world, including at least 13 countries in Africa, are currently at different stages of exploring options of using Central Bank Digital Currency (CBDCs) which generally are more stable than cryptocurrencies and could provide cheaper and faster payments.
According to him, considering that mobile money is already facilitating financial access to millions of unbanked people in Africa, the adoption of CBDCs would consolidate this achievement and allow digital transactions in remote places at minimal or no cost.
Moreover, Mr. Barry stated that allowing the unbanked and underbanked parts of our population to participate in digital payment systems would undoubtedly help reduce the pervasive informality in our economies, expand the tax base and boost government revenue.
Additionally, he said CBDCs could also facilitate more cross-border transfers and payments by shortening payment chains, and reduce through enhanced competition, the huge cost of remittance transfers to sub-Saharan Africa estimated at 8% of the transfer amount in 2020.
Speaking further, he said faster clearance of cross-border payments can help promote trade integration with the rest of the world and the much-needed intra-regional trade especially within the context of the African Continental Free Trade Agreement.
Furthermore, he reiterated that CBDCs do not only serve as viable alternatives to private cryptocurrencies or create the large use of monetary substitution and undermine monetary policy transmission, but also enable timely and targeted welfare distribution.