By Kwame A. Oppong, Former Director, FinTech and Innovation Office, Bank of Ghana
The swift expansion of stablecoins in emerging markets has reignited an important debate about the future architecture of money. A question I am increasingly asked is whether private stablecoins will overtake central bank digital currencies (CBDCs) or if these instruments will evolve in tandem.
It is a provocative question, but perhaps a false dichotomy.
I have evaluated the opposing arguments thoroughly and settled on the view that emerging markets are unlikely to abandon CBDCs entirely in favor of stablecoins. Rather, many countries will redesign their digital-money strategies to embrace hybrid monetary ecosystems whereby retail and wholesale CBDCs coexist alongside regulated stablecoins, tokenized bank deposits and instant-payment systems. This is a future that both digital-money enthusiasts and monetary-sovereignty purists can live with.
Stablecoins are enjoying rapid adoption for understandable reasons. They are fast, programmable, interoperable and more efficient for cross-border payments. In economies where inflation, volatile exchange rates, capital controls or inefficient domestic payment systems are major challenges, dollar-backed stablecoins have begun to serve practical roles in payments, remittances, savings and settlements.
This is not theoretical. It is already happening.
Across many emerging and developing economies, users are turning to stablecoins not out of ideology, but utility. They solve real pain points. For merchants, they can reduce transaction friction. For households, they can provide a store of value. For firms, they can improve treasury operations. For migrants, they can lower remittance costs and accelerate settlement.
That explains their appeal. It also explains why some now argue that stablecoins could render CBDCs obsolete.
There is some logic to that argument. The anticipated market failures that CBDC implementations promised to resolve are now being addressed to some extent through stablecoin innovations. This is especially the case for digital-payment efficiency and cross-border transactions.
Fundamentally, the broader substitution narrative ignores the critical difference between adoption and sovereignty. CBDCs are not quite payment products competing with private-sector innovation. At their core, they are public infrastructure that enables the broader ecosystem.
For emerging markets, the value proposition of CBDCs lies less in replicating private innovation and more in preserving monetary autonomy, supporting policy transmission, promoting financial inclusion and anchoring trust in an increasingly tokenized financial environment. That is why most central banks continue to pursue them, according to the Bank for International Settlements (BIS).
Despite the growth of stablecoins, central banks have not retreated from CBDC exploration. If anything, many are refining their thinking. Retail models are being reconsidered. Wholesale use cases are advancing. Design assumptions are evolving.
The question, therefore, cannot be framed in terms of either CBDCs or stablecoins. It is increasingly about what role each should play.
The question, therefore, cannot be framed in terms of either CBDCs or stablecoins. It is increasingly about what role each should play. Indeed, one could argue that the rise of stablecoins may actually reinforce the case for CBDCs rather than undermine it.
The first reason is digital dollarization. Dollar-denominated stablecoins account for the overwhelming majority of global stablecoin activity—98 percent, according to BIS. While this creates efficiencies, it also raises profound concerns for emerging markets. If private digital dollars become dominant for domestic transactions, savings and/or cross-border trade, the implications for monetary sovereignty could be significant.
Domestic-currency substitution could weaken monetary-policy transmission, reduce seigniorage, complicate capital-account management and amplify exchange-rate volatility. This is a strategic sovereignty issue requiring deep deliberation—and not about payments. This is a risk that many emerging markets cannot bear, especially those with fragile macroeconomic environments.
Second, stablecoins present some regulatory and systemic-risk concerns. It is, therefore, imperative that supervisory attention be concentrated on issues such as reserve quality, redemption rights, governance, operational resilience, consumer protection, financial-integrity controls and run risks.
The failures of algorithmic stablecoins served as a stark warning. But even fiat-backed models raise prudential questions, especially where issuers operate beyond the full supervisory perimeter of domestic regulators.
An increasingly important payments layer built on foreign-issued private liabilities may expose emerging markets to risks over which they have limited policy control. That reality elevates the strategic relevance of CBDCs—particularly wholesale CBDCs.
Indeed, the more interesting frontier may no longer be retail CBDCs competing with wallets, but central bank money evolving for a tokenized financial system. Wholesale CBDCs linked to cross-border settlement, tokenized-securities markets, programmable liquidity and digital public infrastructures (DPIs) may ultimately prove more consequential than retail deployments. This is where much of the innovation frontier is now moving.
Retail CBDCs may face slower uptake in countries where payment markets already function relatively well or private solutions dominate. But wholesale CBDCs may emerge as critical public-settlement assets in a world of tokenized finance.
That distinction matters.
At the same time, it is also plausible that stablecoins will outpace retail CBDCs in several high-value use cases, such as cross-border payments and remittances. Stablecoins already offer lower costs, faster settlement, round-the-clock availability and better programmability than many traditional alternatives. Trade settlement, treasury management and merchant payments may be next. In these domains, stablecoins may become important payment rails if regulation enables responsible innovation while mitigating risks.
This evolution carries several implications.
First, emerging markets may shift from narrowly focusing on issuing CBDCs toward governing digital-money ecosystems. That is a profound change. Instead of treating sovereign digital-currency issuance as the central objective, policymakers may increasingly focus on regulating interoperability among CBDCs, tokenized deposits, regulated stablecoins and instant-payment systems. The policy challenge becomes ecosystem design, not merely product deployment.
Second, central banks may increasingly position themselves less as competitors to private innovation and more as architects of trust. Their role may center on designing rules, settlement assets, interoperability standards and safeguards that allow multiple forms of digital money to coexist safely. This may be a more natural role for central banks than attempting to outcompete market-driven innovation.
Third, geopolitical and monetary dynamics may shift. If foreign-currency stablecoins scale across emerging markets faster than domestic digital alternatives, this could deepen new forms of digital-currency dependence. That possibility may spur greater interest in regional payment integrations, multicurrency-settlement arrangements, passporting models and even regional settlement assets. For Africa and other emerging regions, this conversation is likely to intensify.
Fourth, financial-inclusion outcomes will depend heavily on design. Stablecoins may expand access in some contexts. But without careful governance, they may also deepen exclusion through digital divides, compliance barriers or platform concentration. CBDCs were partly conceived to address public-interest needs that markets may underprovide. To ditch those policy objectives would betray decades of hard work and progress.
So, regarding the question of whether emerging markets will abandon CBDCs in favor of stablecoins—I find that unlikely. What is more plausible is that emerging markets will abandon simplistic narratives about CBDCs.
The future may not belong exclusively to retail CBDCs or private stablecoins. It may belong instead to layered monetary ecosystems in which:
- Central bank money remains the anchor of trust and settlement,
- Regulated stablecoins drive innovation in payments and programmability,
- Tokenized deposits connect traditional banking to digital markets and
- DPIs ensure interoperability, resilience and the preservation of the public interest.
In such a context, stablecoins do not replace CBDCs. They compel central banks to rethink and redesign them. That may be the deeper lesson.
The debate is no longer about whether public or private digital money will “win”. It is about who governs the next monetary architecture. And that is a fundamentally different question.
For emerging markets, this may be among the defining policy questions of the coming decade. Because whatever shape this evolution takes, it will influence far more than payments. It will shape sovereignty, financial inclusion and financial stability. It may indeed shape the future geography of money itself.
Time, as always, will be the ultimate arbiter.
But one thing already seems clear: Emerging markets are unlikely to choose between CBDCs and stablecoins in a binary fashion. They are far more likely to build a future in which both matter—and where the real challenge lies not in choosing one over the other, but in governing both wisely.
Kwame A. Oppong is a digital financial services and fintech policy expert with extensive experience spanning technology innovation, financial regulation, and digital payments ecosystems. He is a former Director of FinTech and Innovation at the Bank of Ghana, where he led key initiatives including Ghana’s central bank digital currency (eCedi) pilot and the development of regulatory frameworks for mobile money and payment service providers. He has worked with global organizations such as the Consultative Group to Assist the Poor (CGAP) and Millicom, and currently advises on fintech, digital public infrastructure, and financial sector policy across emerging markets. His work focuses on the intersection of innovation, regulation, and financial inclusion, with particular interest in the evolving role of digital currencies in shaping the future of money.