Published Paper Details:

The rise of digital currencies can be viewed as a shift towards a new more improved and enhanced way of the global financial systems by enhancing financial access in different regions. Over time, with the innovations in technology, people are now using Cryptocurrencies and Central Bank Digital Currencies, as prominent forms of digital money. These assets include characteristics that traditional funds lack as they foster cheaper rates in transactions, faster international payments, and better access for confined populations in the developing world. However, the use of digital currencies also presents a number of issues; first of all, those of regulatory nature, followed by problems associated with the cybersecurity of these currencies and, last but not least, the problem of financial literacy of users. Digital currencies' acceptance across the world differs on various degrees, and the regulation of the same is a hot topic across the world where some countries incorporate the innovation into their economic development strategies while others remain skeptical, or even outright intolerant of the concept mainly due to the prevailing volatile economic and security concerns. However, in developed countries, digital currencies are perceived as improvements of payment systems, while in the developing countries they present a chance in giving basic financial services to those who are deprived of them. Furthermore, the said utilization of blockchain technology, which is mostly implemented behind most digital currencies, might enhance effectiveness and transparency and minimize fraud in today's financial services. But, the absence of structures and the gap between the physical and the digital worlds in most parts of the world may slow down the use of digital tokens. Also relevant to policy is the centralisation versus decentralisation dilemma that continues to be contentious as government seeks to launch state-backed digital currencies against decentralized cryptocurrencies that bring risks to the global economy. The objective of this paper is to analyze how digital currencies can drive financial inclusion examining their potential as well as challenges they face as well as reviewing the world's regulatory environment and future prospects for the use of digital currency.