The introduction of a digital US dollar might aid in democratizing banking in poorer countries, but it could also pose a risk to local currencies if it were readily accessible, said former Indian central bank governor Raghuram Rajan in a statement.
An easy-to-use electronic version of the dollar could spur people in lower-income nations to use the dollar for day-to-day transactions, something that’s difficult today thanks to the need for physical bills. That might effectively crowd out the local currency in countries where there’s low levels of confidence in macroeconomic policy, Rajan added.
