More advanced economies face a specific challenge: declining demand for cash. The share of tickets in point-of-sale transactions fell to 11% in North America, 19% in Asia-Pacific and 27% in Europe. As banknotes eventually disappear from circulation and from vaults, public confidence in the convertibility of bank deposits into official currency may become “more of a theoretical construct than an everyday experience”, in Ulrich’s words. Bindseil of the European Central Bank and others. .

This could be problematic for financial stability, especially if lightly regulated private sector tokens like stablecoins – cryptocurrencies that promise 1:1 convertibility with dollars or other widely accepted assets – step into the breach and replace the official species. For emerging markets, this would mean a return to “dollarization” and an end to decades-long efforts to establish their own sovereign currencies.

Fortunately, this is not yet a universal problem. Cash continues to dominate the payments scene in Latin America, the Middle East and Africa, according to the FIS Worldpay Global Payments Report 2021. It is unlikely to disappear soon, even in some highly developed economies like Japan. In other words, not all central banks face the same urgency to prepare for a post-cash future by going digital.

So who exactly needs a CBDC first? The contrast between Poland and Peru may help answer this question.

Both are emerging markets according to MSCI Inc., although the Central European nation’s per capita income of $15,000 is two and a half times that of the Latin American country. Both have a fairly short history of monetary sovereignty. As Poland set out to rebuild its old command-and-control economy in the 1990s, foreign cash dominated the zloty 3:1 in trade. (Until the 1980s, authorities printed a special legal tender against dollar deposits. These “bony” notes could be used for everything from American cigarettes to Japanese cameras to Western European clothing, but n had no value outside Poland.) Peru entered the new millennium. with 80% of bank deposits denominated in dollars.

But while Poland and Peru are seen as dedollarization success stories, their retail financial landscapes are very different. Poland spent the 1990s reforming its monetary management and eventually gained public confidence in the zloty, both as a medium of exchange and as a store of value. Peru’s mountainous topography made things more complicated. Dollar bills (and bank deposits) are still an integral part of the country’s dual currency system. Financial inclusion has not progressed enough, especially in rural areas.

Almost 9 out of 10 Polish adults have bank accounts; only slightly more than half of Peruvians do. The payment industry is very competitive in Poland, with consumers benefiting from a wide variety of non-cash options to settle their claims. BLIK, the dominant network accessible to almost all mobile phone users, is now more widely used in e-commerce than cards. The pandemic has also given BLIK a boost. Integrated into the applications of several banks, it is increasingly accepted in person-to-person payments as a substitute for cash. In Peru, where internet access in rural areas is limited, Covid-19 has led to an increase in precautionary currency hoarding: cash in circulation has risen to 10% of gross domestic product, up from 7% in 2018 .

Given the overabundance of choice for consumers, the Polish authorities see no need to add one more. “So far, no specific social purpose has been identified that digital zloty issuance would serve,” Polish monetary authority officials wrote in an article included in a recent BIS study on attitudes to towards CBDCs in emerging economies. In Peru, on the other hand, the acceptance of non-monetary instruments is uneven. Digital payments are growing. But most transfers are done in a closed loop, between customers of the same financial entity.

Peru hasn’t made a decision on digital money yet, but it’s not ruling it out either. “Over the medium term, we anticipate that some payment flows could be improved by introducing a national CBDC,” its central bank officials wrote for the BIS study.

For example, suppliers of goods to half a million family stores would save on cash collection fees if merchants could receive and make payments in digital soil. Conditional cash transfers and government pension payments – as well as service fees and charges paid by the population to state agencies – will not require an expensive visit to a bank branch. In rural areas, the risk of theft associated with exchanging physical bills will be reduced. If the anonymity of cash is preserved, people may prefer to transact using CBDCs. There won’t be long queues to buy prepaid cards from different operators if the 80% of Lima’s population who travel by bus could pay for trips using CBDCs. Rural migrants working in the capital will be able to send money home profitably.

Before engaging in digital cash, emerging markets should consider whether they are closer to Poland or Peru. If their country’s private sector cannot or will not provide high-quality, interoperable payment solutions at a reasonable price for everyone, then central banks must intervene early – both to retain monetary sovereignty and to expand financial inclusion. Otherwise, they can afford to wait.

More from Bloomberg Opinion:

• Money is dying, but don’t bury it yet! :Andy Mukherjee

• Excited about a digital dollar? Not So Fast: Darrell Duffie

• Money-loving Japan could be preparing for crypto: Andy Mukherjee

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services in Asia. Previously, he worked for Reuters, the Straits Times and Bloomberg News.

More stories like this are available at bloomberg.com/opinion