What's Happening?
A report from the Venom Foundation, based in Abu Dhabi, forecasts a significant transformation in the global financial system, predicting that physical currency will become largely obsolete within 36 months.
The study, titled 'The End of Traditional Money: How Asia and MENA Are Rewriting Global Finance,' highlights that 137 countries, representing 98% of global GDP, are actively developing central bank digital currencies (CBDCs). Major launches are expected between 2025 and 2028, including the UAE's Digital Dirham set for Q4 2025. The report synthesizes data from various international financial institutions and predicts the stablecoin market will reach $2 trillion by 2028, with cash transactions becoming a minority in major economies.
Why It's Important?
The shift towards digital currencies is poised to reshape global finance, with Asia and MENA regions leading due to regulatory clarity. This transition could reduce dependence on traditional banking systems and the US dollar, impacting global economic dynamics. The report suggests that digital currency integration is an immediate operational imperative for financial institutions, warning of potential disintermediation for commercial banks and obsolescence for payment processors. The advancement of cross-border CBDC platforms, such as Project mBridge, could significantly reduce correspondent banking costs and alter geopolitical trends.
What's Next?
The report calls for immediate international coordination on standards to address cybersecurity threats, privacy concerns, and financial stability risks. It emphasizes the need for regulatory frameworks developed in 2025-2026 to shape monetary infrastructure for decades. As digital currencies gain traction, financial institutions must adapt to new operational realities, potentially leading to significant shifts in global economic power and infrastructure.
Beyond the Headlines
The report highlights the geopolitical implications of reducing dependence on dollar-based infrastructure, suggesting that the effectiveness of sanctions may decline as alternative payment rails proliferate. This could lead to a reconfiguration of global economic alliances and power structures, with nations seeking greater autonomy in their financial systems.
