Three things the ECB is doing to drive crypto adoption among EMDEs
The European Central Bank (ECB) has listed three factors driving the adoption of cryptocurrencies in emerging and developing economies (EMDE) in a new report on Bitcoin and global Virtual currencies and local drivers.
Crypto can attract investors from countries with regulated regimes
Firstly, cryptocurrencies may be used as speculative assets, which could be particularly attractive to investors in countries where the selection of investment assets in portfolios is restricted by regulatory or institutional factors.
Become a better storage method than fiat currencies
Secondly, despite significant price volatility, these cryptocurrencies might represent a better store of value compared to the national currencies of countries experiencing high inflation and depreciating exchange rates.
Cryptocurrencies can be used as payment method for cross-border transactions
Thirdly, residents of emerging markets and developing economies can use cryptocurrencies as a means of cross-border transactions to bypass capital controls or reduce the costs of receiving foreign remittances.
Devaluation of fiat currencies spurs more cryptocurrency trading
The European Central Bank also noted that since the onset of the Covid-19 pandemic, significant devaluation of fiat currencies has accelerated, especially in emerging markets and developing economies. This situation has contributed to stimulating more cryptocurrency transactions.
