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Digital bonds as collateral in central bank lending
The development of the digital bond market raises important questions for central banks tasked with monetary policy and financial stability. While central banks have been actively engaging with digital currencies, less attention has been...
This paper examines whether broader financial inclusion is associated with lower poverty in a large country-year panel and considers, in a deliberately restrained way, how those findings may inform current supervisory and AML/CFT debates. Using global data for 2004–2022, the analysis estimates two-way fixed-effects models with country-clustered standard errors, supplemented by IV-fixed-effects and dynamic GMM specifications. The main result is consistent across the core poverty models: higher financial inclusion is associated with lower poverty, although the size of the association varies across regions and structural conditions. Interaction and threshold exercises further indicate that the poverty-reducing association of inclusion is stronger where inequality is higher, education and digital readiness are better, and financial depth is greater, while inflation weakens the relationship. Building on these findings, the paper discusses their potential implications for supervisory policy and proposes further research areas, with particular attention to the proportionality of AML/CFT implementation and its possible effects on access to formal financial services.
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This paper is part of the Banking Supervision Policy Working Paper Series in the context of the SSM-EUI partnership on SSM Banking Supervision Learning Services. Read more.