09/11/2021 | BANK FOR INTERNATIONAL SETTLEMENTS
From the ancient Indian rupya, to cacao beans in the Aztec empire, to the first paper money in China, money and payments have been evolving for centuries. The countries that are today called emerging market and developing economies (EMDEs), which collectively make up 84% of the world’s population but only 37% of GDP at current prices, are no exception. In recent decades, physical cash and claims on commercial banks (i.e. deposits) have become the main vehicles for retail payments around the world (Bech et al., 2018). Compared to physical cash, commercial bank money provides more safety, enables remote transactions, and allows banks to extend other useful financial services; this may ultimately benefit economic efficiency and enhance economic policy oversight (Listfield and Montes-Negret, 1994).