Digital currencies issued by emerging market (EM) central banks are set to enhance financial inclusion and facilitate greater control over their nations' economies.
As central bank digital currencies (CBDCs) are adopted in EM countries, more people become directly exposed to interest rate decisions, greatly strengthening the power of monetary policy. This will likely reduce inflation and interest rate volatility and, ultimately, lower long‑term bond yields.
In this third article in a series, we discuss how CBDCs will strengthen monetary policy in EM countries and how changes in the savings and investment balances will strengthen the economies of those countries.
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