Tourists often rely on cash when visiting a new country—but for host governments, this presents multiple challenges.
Foreign hard currency in physical form raises concerns around transparency, tax evasion, and security. Unlike local residents whose transactions are fully traceable within the domestic financial system, foreign visitors operate outside regulated payment infrastructure, making it difficult for authorities to monitor and manage economic activity.

Moreover, the influx of foreign cash creates temporary demand for local hard currency, requiring domestic institutions to release additional liquidity into circulation. When tourists depart and demand drops, this often results in a local cash surplus, which can destabilize monetary balance and create inflationary pressure in the local economy.

To mitigate these risks, forward-looking governments are now encouraging visitors to convert their physical currency into Digital Local Currency (DLC). This ensures a safer, more transparent payment experience for tourists while supporting the host country’s goals for financial inclusion, digital transformation, and economic stability.