Stable coins, a bigger threat to banking

February 10, 2022 India Blockchain

While doing academic research on Bitcoin, I was struck by the “Global crypto adoption index,” which measures the adoption of crypto currencies across 154 countries. What amazed me was the geographic locations of the top three countries (Vietnam at number one, India at two, and Pakistan at three). What makes them so unique is, like Bangladesh, they are lower-middle income countries and share somewhat similar economic circumstances like inflation and unemployment, among other activities.

Surprisingly, although Bangladesh has banned the usage of Bitcoin and other crypto currencies in 2017, Bangladesh ranks 29 in the index with an index score of 0.09, compared to 0.37 and 0.36 by India and Pakistan, respectively. The three elements of this index include total crypto currency received by a country, total transactions, and peer-to-peer trade volume-all weighted by purchasing power parity per capita. The fact that the index provider has this level of detail suggests the existence of unofficial crypto currency activities in Bangladesh that the authority may or may not be aware of. We must not forget that controlling money laundering is a perennial battle for Bangladesh, and until recently, we were not aware of the presence of casino gambling in our community. Hence, despite the banning, Bangladesh’s position in the global crypto index is a matter of serious public concern.

Why is crypto currency growing so popular in neighbouring countries and Asia in general? As of 2021, Asia accounts for half of all crypto currency users globally. Unpredictable inflation, weakening of the domestic currency, and reduced transaction costs, are among the other factors making open-source crypto currencies increasingly popular among young consumers. Their very popularity has turned out to be a litmus test for emerging central banks who must regain public trust in the monetary policymaking of maintaining price stability and exchange rate stability.