Digital money and its impact on local economic variables. The case of Uruguay

Adriana Cassoni and Camilo Ramada

The numerous digital means of payment that are currently operative in Uruguay are designed to target the general population and particular segments of it to a different extent. They are therefore expected to have a distinct impact on the local and the global economy development. Overall money flows may increase through the use of cards, particularly those that allow differing payments along several time periods while almost all the instruments and policies described generate increases in the number of transactions within the formal economy (diverting them from the informal sector). Many of them further seek to improve social and economic conditions of the poorest households by promoting their financial inclusion and promote the formalisation of MSMEs. Given the high concentration of poor households within specific geographical areas (both neighbourhoods and communities) and the creation of specific retailer network linked to many mobile systems, they should also increase money flows at the local economy level. It is important to acknowledge that the emission of digital means of payment adds direct purchasing power to the market, particularly those that are based on credit, and hence apart from increasing the overall level of economic activity they may also generate significant inflationary pressures.

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