UNDP: CBDCs Boost Financial Inclusion, Why Stablecoins Fall Short
Stablecoins parachuted in from abroad will do little to boost inclusion
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The UN Development Program (UNDP) looks at retail CBDCs and sees them as a means of overcoming the barriers to inclusion in emerging economies and an unprecedented opportunity to reshape the financial landscape.
The UNDP is the leading United Nations organization fighting poverty, and their support for CBDCs is in direct contrast with crypto bros who now promote dollar stablecoins as the solution to inclusion.
What does the UNDP know that the crypto bros do not?
Read this carefully:
“CBDCs, if properly designed and managed, may have the potential to enhance financial inclusion by addressing access and price barriers. In terms of improving access to financial services, CBDCs can be designed to reduce identity management requirements (particularly Know Your Customer[KYC]) in low-risk contexts. This could allow the use of digital currencies without the need for bank accounts or minimum balances and offer offline functionality to mitigate the impact of physical remoteness.”
Note the emphasis on “reduced identity management requirements” due to the lack of personal identification and bank accounts. This is a key aspect for promoting CBDC adoption and can be custom-tailored on a national basis.
Compare CBDC’s flexibility with the rigid KYC/AML required by US stablecoins, which under the GENIUS Act will be the same as used by US banks.
I hate to break it to those peddling stablecoin hype, but an unbanked person in an emerging economy, by definition, will never pass US KYC/AML!
This is why USD stablecoins cannot possibly be used to bring financial inclusion in the world’s poorest countries, despite all the hype.
The UNDP also makes it clear that CBDC solutions are part of a broader “digital public infrastructure” (DPI) framework, including digital ID, interoperable payments, and consent-based data governance similar to that in India and Brazil.
While a CBDC brings DPI, critical to developing nations, a US dollar stablecoin, when parachuted in from abroad, brings none.
This is why US stablecoins have no future bringing inclusion to the world’s poorest despite all the hype, while CBDCs do.
👉Key CBDC concepts that stablecoins ignore
🔹 CBCs are not standalone tools. To be effective and inclusive, CBCs should be viewed as one layer of a broader Digital Public Infrastructure (DPI) framework. DPI refers to foundational digital systems such as digital identity, interoperable payment systems, and consent-based data governance that enable societies to safely and inclusively participate in the digital economy. Examples include India's India Stack and Brazil's PIX.
🔹 Beyond conventional use cases such as retail payments and taxation, CBCs have significant potential to advance development outcomes, particularly in the areas of social protection, humanitarian assistance, and climate resilience. Their programmability, transparency, and traceability make them a compelling tool for disbursing Government-to-Person (G2P) payments and aid with greater efficiency and accountability.
🔹 Critical to the success of CBDCs is the ability to address foundational challenges, such as digital and financial literacy, infrastructure gaps, and the need for robust technology, regulation and governance arrangements such as privacy protections and cyber security mechanisms. Stakeholder collaboration across public and private sectors plays a pivotal role in ensuring that CBDC systems are scalable, adaptable, and aligned with global trends.
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