Navigating the Promise and Perils: Virtual Currencies' Role in International Development

Examining Virtual Currencies: Navigating the Risks and Uncertnties of a Pioneering Payment Technology in International Development

This exploratory brief delves into the potential implications that virtual currencies, as well as central bank-issued digital currencies CBDCs, might have on stakeholders operating within international development landscapes. Over recent years, the introduction of these innovative payment systems has significant interest among those seeking to tackle longstanding challenges related to affordable cross-border transactions, financial inclusion, and fostering inclusive digital economies.

However, this brief highlights that the extent to which these innovations can facilitate progress towards such objectives remns ambiguous, emphasizing the necessity for a thoughtful approach grounded in responsible investigation and evidence-based decision-making when it comes to virtual currencies.

This exploratory document offers:

• An introductory overview of virtual currencies,

• Hypothetical scenarios illustrating potential paths forward for this technology, and

• Practical considerations for development practitioners on how they might address potential impacts.

Building upon an earlier publication that examined the implications of distributed ledger technology DLT in international development settingsthe Blockchn Primerthis brief underscores the importance of a critical assessment of any technological tool's relevance and appropriateness when addressing specific developmental goals.

In summary, this document provide insights into:

• The foundational concepts surrounding virtual currencies,

• Potential future developments within the sphere of virtual currencies, and

• Strategic approaches for development stakeholders in considering the impacts of these innovations.

It is inted as a resource that complements ongoing efforts to responsibly explore and leverage digital technologies, such as DLT, for impactful outcomes in international development contexts.
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