Cryptocurrency surge driving fast-track CBDC development in developing economies

The findings show that cryptocurrency adoption has become a decisive global catalyst. The effect is especially strong in low-income and financially excluded economies, where rapid digital currency use is reshaping monetary policy priorities and intensifying central banks’ efforts to defend payment systems and regulatory control.

Rising cryptocurrency adoption is now one of the strongest forces accelerating the worldwide rollout of central bank digital currencies (CBDCs), reveals a new global analysis. The research examines how digital asset use, financial inclusion gaps, governance conditions, and technological infrastructure influence a country’s position in the global CBDC race.

The study, “Cryptocurrencies and Central Bank Digital Currencies in Global Perspective,” published in the Journal of Risk and Financial Management, analyzes CBDC development stages across 109 countries between 2020 and 2024. It uses a combination of panel regressions, ordered logistic models, dynamic GMM estimation, and margins analysis to determine how the Cryptocurrency Adoption Rate (CAR) affects a nation’s likelihood of moving from early CBDC research to full-scale launch.

The findings show that cryptocurrency adoption has become a decisive global catalyst. The effect is especially strong in low-income and financially excluded economies, where rapid digital currency use is reshaping monetary policy priorities and intensifying central banks’ efforts to defend payment systems and regulatory control.

How the surge in cryptocurrency adoption pushes nations toward CBDCs

The study assesses whether the rise of cryptocurrencies meaningfully influences countries’ transitions from CBDC research to more advanced development and deployment. Across every empirical model estimated, the authors find a consistent pattern: higher cryptocurrency adoption predicts faster, deeper progress across all CBDC stages.

The analysis uses global data from the Chainalysis Cryptocurrency Adoption Index to capture the intensity of digital asset use within each country. When matched with the IMF’s CBDC track database, a clear relationship emerges. Nations with high CAR levels tend to move away from the earliest category, no plan or cancelled CBDC exploration, and increasingly occupy the development, pilot, or launch stages. This pattern remains stable even when controlling for macroeconomic factors such as inflation, interest rates, exchange rate volatility, and governance quality.

The ordered logistic regression, which is well-suited to the five-level CBDC progression scale, reinforces the conclusion. As cryptocurrency adoption rises, the probability of remaining in the early CBDC phases declines sharply. In contrast, the probability of advancing to pilot or launch grows substantially. These outcomes hold even after adjusting for year effects, regional differences, economic size, and institutional strength.

The authors explain this phenomenon using Diffusion of Innovation theory. Cryptocurrencies represent a technological innovation that spreads rapidly through societies when traditional banking systems struggle to meet public demand. As adoption intensifies, central banks perceive greater pressure to respond with their own digital currencies to preserve monetary sovereignty, stabilize payment channels, and prevent dependence on unregulated private digital assets.

Institutional theory further supports the interpretation. As crypto activity expands, regulatory legitimacy becomes a growing concern. Countries see CBDCs as instruments to maintain control over the monetary system while offering a state-backed alternative to private decentralized currencies. This institutional motivation is particularly strong where governments lack robust mechanisms to regulate or monitor the movement of digital capital.

The net effect is clear: cryptocurrencies are no longer merely a parallel financial system but have become a structural driver of state digital currency innovation.

Why developing economies are moving faster than wealthy nations

The authors investigate whether the effect of cryptocurrency adoption differs by income level, financial inclusion rates, and technological readiness. Their findings reveal that emerging economies show the strongest and most statistically robust relationship between crypto use and CBDC development.

In low-income and lower-middle-income countries, CAR exhibits a powerful, positive influence on CBDC acceleration. The association remains significant even after controlling for digital infrastructure and macroeconomic variables. These countries often face limited financial access, weak traditional banking systems, and fragmented payment networks. In such environments, cryptocurrencies frequently fill service gaps by enabling faster and more accessible cross-border transfers, savings options, and informal financial activity.

This expanding crypto ecosystem creates both opportunities and risks. On one hand, it signals the public’s willingness to adopt digital financial tools. On the other hand, it increases pressure on central banks to establish regulatory oversight and provide safer digital alternatives. The study finds that CBDCs in these regions are framed as tools for financial inclusion, allowing governments to extend formal financial services to populations historically left out of banking systems.

Upper-middle-income countries also show a strong CAR-CBDC connection. Here, crypto markets tend to reflect rising economic activity, higher internet penetration, and more complex financial needs. Central banks in these economies often pursue CBDCs to modernize payment infrastructure, accommodate digital commerce, and reduce reliance on cash.

In high-income economies, the relationship between CAR and CBDC advancement weakens significantly. The authors report minimal statistical significance in this segment. Their interpretation is that wealthy nations are not developing CBDCs as a defensive response to cryptocurrency adoption but as strategic upgrades to long-standing financial systems. In these markets, CBDCs are linked to goals such as enhancing cross-border payment efficiency, strengthening monetary policy transmission, reducing settlement times, and preserving long-term competitiveness as global payment rails evolve.

The study’s heterogeneity analysis thus reveals a global divide: in developing economies, CBDCs are a reactive and corrective measure; in advanced economies, they are proactive instruments for future-proofing national financial infrastructure.

How macroeconomic conditions, inclusion levels, and technology shape CBDC progress

The authors evaluate a wide range of variables, including inflation, governance quality, financial inclusion, mobile connectivity, and economic freedom, to determine which conditions best predict a country’s CBDC trajectory.

One of the most influential conditions identified is financial inclusion. Countries with low financial inclusion rates show the strongest responsiveness to CAR. As more citizens transact with cryptocurrencies due to limited access to banks or mobile money, the urgency for CBDCs intensifies. This trend underscores a critical insight: CBDCs are increasingly viewed as digital public infrastructure for serving unbanked and underbanked populations.

Technological readiness also plays an important role. Nations with higher mobile connectivity and better digital literacy tend to advance more quickly through the CBDC development cycle. Even so, the study finds that crypto adoption retains its influence even after accounting for tech infrastructure. This suggests that the move toward CBDCs is not only a function of technical capability but also a policy response to structural market pressures created by decentralized digital currencies.

Macroeconomic indicators generate mixed effects. Inflation and interest rates are not consistently associated with CBDC advancement across models, which contradicts the assumption that unstable monetary environments directly push governments to adopt CBDCs. Instead, the study finds that institutional and technological factors matter more than short-term macroeconomic fluctuations.

Governance quality also shows a complex relationship. In some models, stronger governance correlates with a higher likelihood of advancing CBDCs, reflecting a capacity to manage large digital transformation projects. In other contexts, countries with weaker governance accelerate CBDC efforts due to their inability to effectively regulate fast-growing crypto markets. Both pathways illustrate how governance interacts with national priorities, regulatory gaps, and market pressures.

To further clarify these relationships, the authors use margins analysis to estimate probability changes as CAR rises. The probability of a country having no CBDC plan drops sharply, while the likelihood of being in the development, pilot, or launch stages rises. These patterns grow more pronounced during 2022–2024, suggesting that the global digital currency ecosystem has rapidly matured.

Overall, crypto adoption, financial inclusion, and technological readiness operate as reinforcing forces, jointly accelerating CBDC development in many parts of the world.