Social Currencies in the Digital Era: Challenges and Opportunities

Abstract

In recent years, two processes of monetary innovation have occurred simultaneously: the digitization of money and the rise of social currencies. These trends have been integrated and have led to the emergence of what we call digital social currencies. This paper has two objectives. On the one hand, we assess the advantages and disadvantages of a complete digitization of social currencies. While new technologies and digitization offer significant advantages for social currencies, such as the possibility of making them more far-reaching and efficient, they can also have several challenges and problems. Among the most important problems is the exclusion of use by individuals with little interest or digital skills. Focusing on this problem, in the second part of the paper we conduct a quantitative analysis, using multilevel logistic models and data from the Global Findex survey, to discern which part of the population are less susceptible to the use digital money. Knowing which population groups might be excluded from digital social currencies can be used to develop and design public policies aimed at improving financial and digital inclusion for the entire population.