Central bank digital currencies (CBDCs) and stablecoins could enhance the accessibility and quality of financial services for Pacific island nations, according to a report by the International Monetary Fund (IMF).
Experts highlighted the challenges faced by “dozens” of jurisdictions and microstates in the Pacific islands region:
“Limited access to financial services contributes to persistent poverty and inequality. These countries also rely on remittance flows, making them disproportionately affected by the reduction in cross-border banking relationships.”
These nations could benefit from the “digital money revolution” by developing payment systems and blockchain technologies, thereby stimulating their economies.
The report primarily focused on CBDCs, though the IMF is open to the use of certain stablecoins.
The Fund did not recommend that small Pacific island nations issue their own sovereign stablecoins due to a lack of supervisory capabilities. However, the report’s authors suggested exploring the use of private USDT from Tether.
“Foreign currency-backed stablecoins could become a viable alternative for countries without their own currency, but only under strict regulation and supervision,” the experts emphasized.
According to the document, none of the Pacific island countries currently use private cryptocurrencies or stablecoins. Meanwhile, only Fiji, Palau, the Solomon Islands, and Vanuatu are exploring CBDCs.
Previously, the IMF cautioned Oceanian nations against adopting digital assets. However, the organization acknowledged that certain regional characteristics make crypto payments highly effective.
Back in January, IMF head Kristalina Georgieva stated that cryptocurrencies are merely investment tools.