scholarly journals Central bank digital currencies: experience of pilot projects and conclusions for the NBU

2020 ◽  
Vol 2020 (4) ◽  
pp. 103-121
Author(s):  
Yuliia Shapoval ◽  
◽  
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Financial Stability ◽  
Banking System ◽  
Developed Countries ◽  
The Bahamas ◽  
Bank Of England ◽  
The Impact

An overview of the definitions of central bank digital currency (CBDC), formulated by researchers of the International Monetary Fund (IMF), the Bank for International Settlements (BIS), the Bank of England, is presented, and the essence of the CBDC is revealed. It is stated that the existing electronic money is a digital form of obligations of financial intermediaries, and CBDC is a form of emission and obligations of central banks. The types and forms of CBDC are generalized, namely: retail or wholesale, account-based or token-based ones. The structure and functionality of the register, payment authentication, access to infrastructure, and governance are defined as factors taken into account during CBDC designing. Similar models of launching national CBDC by the Bank of England (economy-wide access or financial institutions access, and financial institutions plus CBDC backed narrow bank access) and BIS (direct, indirect, hybrid) are under consideration. The synthetic CBDCs are marked as a theoretical concept of CBDC. The overview of projects of the People's Bank of China – "e-renminbi", the Central Bank of the Uruguay – "e-peso", the Central Bank of the Bahamas – "sand dollar" and the Eastern Caribbean Central Bank affirm the interest of developing countries in launching national retail CBDCs. It was found that apart from the Riksbank with the successful "e-krona" project, most of the monetary authorities of developed countries (BIS, Bank of Japan, Bank of Canada, Deutsche Bank, FRS) are just planning or starting to experiment with the issuance of digital securities, which demonstrates their concern about the restructuring of the banking system and the changes of global role of traditional currencies. Among the positive consequences of the introduction of CBDC for the domestic banking system are the emergence of an alternative payment instrument, the implementation of effective monetary policy through increased influence on interest rates, and regulation of the legal regime of crypto currencies. At the same time, the introduction of CBDC involves certain changes in financial intermediation (replacement of the deposits of commercial banks with the CBDC, the performance of functions inherent to commercial banks by the central bank or fintech companies), and will require powerful technical capabilities, including those related to protection from cyber risks. The results of the study point to the need for a cautious approach to the implementation of the Ukrainian CBDC only after the NBU assesses the public demand for new forms of money and the impact of the launch of CBDC models on price and financial stability, and compares available payment technologies that can achieve the same goals as the CBDC.

scholarly journals Central bank digital currencies: experience of pilot projects and conclusions for the NBU

2020 ◽  
Vol 2020 (4) ◽  
pp. 97-115
Author(s):  
Yuliia Shapoval ◽  
◽  
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Financial Stability ◽  
Banking System ◽  
Developed Countries ◽  
The Bahamas ◽  
Bank Of England ◽  
The Impact

An overview of the definitions of central bank digital currency (CBDC), formulated by researchers of the International Monetary Fund (IMF), the Bank for International Settlements (BIS), the Bank of England, is presented, and the essence of the CBDC is revealed. It is stated that the existing electronic money is a digital form of obligations of financial intermediaries, and CBDC is a form of emission and obligations of central banks. The types and forms of CBDC are generalized, namely: retail or wholesale, account-based or token-based ones. The structure and functionality of the register, payment authentication, access to infrastructure, and governance are defined as factors taken into account during CBDC designing. Similar models of launching national CBDC by the Bank of England (economy-wide access or financial institutions access, and financial institutions plus CBDC backed narrow bank access) and BIS (direct, indirect, hybrid) are under consideration. The synthetic CBDCs are marked as a theoretical concept of CBDC. The overview of projects of the People's Bank of China – "e-renminbi", the Central Bank of the Uruguay – "e-peso", the Central Bank of the Bahamas – "sand dollar" and the Eastern Caribbean Central Bank affirm the interest of developing countries in launching national retail CBDCs. It was found that apart from the Riksbank with the successful "e-krona" project, most of the monetary authorities of developed countries (BIS, Bank of Japan, Bank of Canada, Deutsche Bank, FRS) are just planning or starting to experiment with the issuance of digital securities, which demonstrates their concern about the restructuring of the banking system and the changes of global role of traditional currencies. Among the positive consequences of the introduction of CBDC for the domestic banking system are the emergence of an alternative payment instrument, the implementation of effective monetary policy through increased influence on interest rates, and regulation of the legal regime of crypto currencies. At the same time, the introduction of CBDC involves certain changes in financial intermediation (replacement of the deposits of commercial banks with the CBDC, the performance of functions inherent to commercial banks by the central bank or fintech companies), and will require powerful technical capabilities, including those related to protection from cyber risks. The results of the study point to the need for a cautious approach to the implementation of the Ukrainian CBDC only after the NBU assesses the public demand for new forms of money and the impact of the launch of CBDC models on price and financial stability, and compares available payment technologies that can achieve the same goals as the CBDC.

Assessment of the determinants of the impact on the formation of interest rates of Russian commercial banks

2020 ◽  
pp. 146-152
Author(s):  
Ю.С. Караваева
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Correlation Coefficients ◽  
Main Determinant ◽  
The Impact

Проблема выявления детерминант воздействия на формирование ставок банковских процентов актуальна ввиду наличия несогласованности в установлении уровня процентов, когда одни кредитно-финансовые учреждения повышают, а другие, напротив, поступательно снижают ставки банковских процентов. В процессе исследования хода к качестве основной детерминанты выделена ключевая ставка Центробанка. Результатом исследования выступил график трансформации ключевой ставки в динамике и коэффициенты корреляции, отражающие степень взаимозависимости показателей ставок. The problem of identifying the determinants of the impact on the formation of Bank interest rates is relevant due to the inconsistency in setting the level of interest, when some credit and financial institutions increase, and others, on the contrary, gradually reduce rates. In the course of the research, the key rate of the Central Bank was identified as the main determinant. The result of the research is a graph of the key rate transformation in dynamics and correlation coefficients that reflect the degree of interdependence of bid indicators.

scholarly journals Peculiarities of ensuring financial sustainability of the Ukrainian banking system

2018 ◽  
Vol 13 (1) ◽  
pp. 184-195
Author(s):  
Olha Vovchak ◽  
Viktoriia Rudevska ◽  
Roksolana Holub
Keyword(s):  
Commercial Banks ◽  
Financial Stability ◽  
Banking System ◽  
Developed Countries ◽  
Equity Capital ◽  
Capital Adequacy ◽  
Financial Sustainability ◽  
Bank Capital ◽  
Strategic Objective ◽  
Capital Ratios

Ensuring and strengthening the financial sustainability of banks is a difficult and not completely resolved task. It is inherent not only to developed countries, it has also be¬come nationally important in Ukraine, which was largely predetermined by the specifics of the domestic banks development. This is explained, in particular, by the banking insti¬tutions’ focus mainly on the relatively short-term activity, the need to work under high risk, resulting from economic and political instability in the country. Therefore, nowa¬days, it is urgent for each Ukrainian bank to focus on the main strategic objective – effec¬tive management and ensuring financial sustainability. The purpose of this study is to assess the current state and identify the features of ensuring financial sustainability of the banking system of Ukraine.It was pointed out in the study that the negative tendency to increase the number of in¬solvent commercial banks during 2012–2017 indicates problems with providing finan¬cial sustainability to commercial banks. The tendencies have been revealed that testify to the problems of the banking system capitalization in Ukraine, which greatly affects its financial stability. Given the analysis of indicators of banks financial sustainability that characterize the bank capital adequacy, the conclusion is made on ambiguous as¬sessment of sufficient level of capitalization, since despite the correspondence of most values of coefficients to the indicators, there is a lack of capitalization of the domestic banking system and equity capital concentration. In general, the results made it pos¬sible to identify trends in the development of capital ratios and financial sustainability indicators and to shape appropriate measures to increase the level of capitalization in order to ensure the financial sustainability of the banking system.

scholarly journals Financial stability instruments for the banking systems of Ukraine

2020 ◽  
Vol 59 ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Financial Stability ◽  
Banking System ◽  
Classification Criterion ◽  
Financial Flows ◽  
Organizational Influences ◽  
Policy Goals ◽  
Credit Cycle ◽  
The Impact

The article focuses on the issues of systematization, analysis and development of the classification of instruments for ensuring the financial stability of the banking system, which is a determining factor in the formation of the necessary influences to ensure the financial stability of the banking system. For the selection and application of the toolkit that most precisely meets the goals, current conditions and priorities of ensuring the financial stability of the banking system, its classification was supplemented by the introduction of new classification features. In particular, in order to take into account the importance of maintaining the continuous circulation of financial flows in the banking system, their consistency and synchrony, we developed a classification criterion ‘for influencing the inflow and outflow of financial flows’, which makes it possible to use the appropriate instrument to complete such specific tasks as ensuring continuity, streamlining the cost of resources, smoothing the impact on interest rates of liquidity changes. Based on the presence of different levels of regulatory influences on ensuring the financial stability of the banking system – strategic and operational – the classification criteria ‘to influence the achievement of monetary policy operational goals’ and ‘to influence the achievement of strategic monetary policy goals’ were introduced. The classification criterion ‘impact on systemic/state-owned banks’ is justified by the significance of systemically important banks for ensuring the financial stability of the banking system, since a significant concentration of assets and capital in such banks requires the use of special tools aimed at preventing systemic risks. Taking into account the need for balancing the flows of credits provided by the banking system, the impact of risks on banking activities, the classification features of instruments for ensuring the financial stability of the banking system ‘by impact on the credit cycle’, ‘by key risks’, ‘by organizational elements’ were proposed. Allocation of the classification features of the instruments for ensuring the financial stability of the banking system will contribute to the achievement of targeting of regulatory and organizational influences and compliance with the criteria of rationality and adequacy when choosing specific instruments. This will create the basis for the selection and application of such a combination of instruments that most closely meets the goals, current conditions and priorities for ensuring the financial stability of the banking system.

Swiss sovereign money vote points up bank reform

2018 ◽  
Keyword(s):  
Central Bank ◽  
Commercial Banks ◽  
Financial Stability ◽  
Banking System ◽  
Budget Deficits ◽  
Banking Reform ◽  
Content Type ◽  
Economic Agents ◽  
Monetary Systems ◽  
Bank Reform

Significance The Vollgeld (sovereign money) proposal, which claimed to make the banking system safer by preventing commercial banks creating money through requiring thems to keep 100% of their deposits at the central bank, was complex and economically flawed, However, it attracted anti-system and anti-bank votes and has generated debate in Switzerland and abroad on financial stability and monetary systems. Impacts The Vollgeld idea has never been implemented anywhere, posing uncertainty about economic agents' reactions and the overall impact. The reform, if used to finance budget deficits, would challenge the central bank's independence. Even if the proposal is refined, the power that 'Vollgeld' would give the central bank to determine lending will remain unpopular. Pressure for banking reform and awareness of regulation have risen worldwide since the 2008-09 crisis making other initiatives likely.

FINANCIAL LITERACY AND FINANCIAL INCLUSION EFFECTS ON STABILITY AND COMPETITIVENESS INDICATORS IN THE BANKING SECTOR: CROSS COUNTRY EVIDENCE FOR AFRICA AND THE WORLD

2021 ◽  
pp. 2150009
Author(s):  
JOÃO JUNGO ◽  
MARA MADALENO ◽  
ANABELA BOTELHO
Keyword(s):  
Credit Risk ◽  
Interest Rates ◽  
Financial Institutions ◽  
Financial Literacy ◽  
Financial Stability ◽  
Banking Sector ◽  
Financial Education ◽  
Financial Inclusion ◽  
The Stability ◽  
The Impact

Financial inclusion has allowed financial products with very high-interest rates and complex conditions to become increasingly affordable. Financial inclusion programs, which aim to reach all social strata, strongly expose financial institutions to risk and particularly credit risk. That said, additional interventions such as financial education of those included are needed. We aim to examine the impact of financial literacy and financial inclusion of households on bank performance. Specifically, we want to examine the impact of financial literacy on credit risk, competitiveness among banks and financial stability. The FGLS estimation results suggest that financial literacy and financial inclusion reduce credit risk and enhance the stability of banks, and regarding competitiveness, our results were inconclusive as they show different effects for each competitiveness indicator, although they point to improved competitiveness in some cases. This research allows policymakers to understand that individual financial attitudes can be reflected in the general welfare of financial institutions and encourages the intensification of programs aimed at improving household financial literacy.

scholarly journals Does Bank Competition Enhance or Hinder Financial Stability? Evidence from Indian Banking

2020 ◽  
Vol 9 (s1) ◽  
pp. 75-102
Author(s):  
Bijoy Rakshit ◽  
Samaresh Bardhan
Keyword(s):  
Commercial Banks ◽  
Financial Stability ◽  
Positive Impact ◽  
Banking System ◽  
Bank Competition ◽  
Z Score ◽  
Dynamic Panel ◽  
Dynamic Panel Model ◽  
Panel Model ◽  
The Impact

AbstractThe primary purpose of this paper is to empirically investigate the impact of bank competition on financial stability in India. We use a dynamic panel model to examine whether an increase in bank competition hindrances financial stability of commercial banks in India over the period 1996 to 2016. Findings reveal that in India, a higher degree of bank competition is positively associated with the prevalence of non-performing loans. Additionally, the positive impact of the Lerner index on Z-score lends support to competition-fragility hypothesis. However, we argue that both the views of competition-stability and competition-fragility can coexist in a single banking system like India.

scholarly journals Role of Central Bank Independence in Banking and Financial Stability Ensuring

2020 ◽  
Vol 4 (2) ◽  
pp. 115-121 ◽  
Author(s):  
Victoria Dudchenko
Keyword(s):  
Developing Countries ◽  
Central Bank ◽  
Financial Stability ◽  
Fixed Effects ◽  
Developed Countries ◽  
Central Bank Independence ◽  
Stage Of Development ◽  
Banking Stability ◽  
The Impact

This paper is devoted to defining the role of the central bank in ensuring banking and financial stability. The main purpose of the study is to assess the direction and strength of the impact of central bank independence in terms of its individual aspects on the parameters of banking and financial stability for different groups of countries. Systematization of literature sources and the results of existing empirical research has shown that the expected effects of increasing the independence of the central bank are to improve banking and financial stability. For the study, a sample of statistical data for 10 developed and 10 developing countries for the period 1991-2012 was formed. The methodological basis of the study were the tools of panel regression modeling with fixed effects with Stata software use. The article presents the results of empirical analysis, which showed that the independence of the central bank is an important factor in ensuring banking stability. At the same time, the impact on financial stability has not been conclusively confirmed. The study empirically confirms and theoretically proves that the stage of development of the country determines the strength of such influence. Thus, developed countries generally show closer links between central bank independence and banking and financial stability, which in most cases are directly dependent, while developing countries have less lasting effects. The results of the analysis of the links between certain aspects of central bank independence and the level of banking and financial stability are of great practical value. The results of the study create a scientific basis for substantiating the sequence of actions aimed at strengthening the independence of the central bank. Thus, in developing countries, the focus should be on defining and prioritizing central bank goals, while developed countries should take a deeper approach to this issue and ensure the independence of monetary policy and financial independence of the central bank. Keywords: central bank, independence, banking stability, financial stability, Z-score, non-performing loans, capitalization, developed countries, developing countries, panel data.

scholarly journals The Impact of Banking Competition on Economic Growth and Financial Stability: An Empirical Investigation

2021 ◽  
Vol 10 (1) ◽  
pp. 203
Author(s):  
George Abuselidze
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Central Bank ◽  
Financial Stability ◽  
Empirical Investigation ◽  
Banking System ◽  
Economic Sector ◽  
Banking Competition ◽  
Banking Market ◽  
The Impact

The paper examines the level of competition in banking market using different econometric models and analyzes the impact of efficiency of the banking system on the economic growth of the country. The research discusses to ensure banking competition as a function of the Central Bank. Also, the paper includes some recommendations developed to improve banking competition. Our hypothesis is that the existence of high levels of banking competition and low concentration in the banking market balances the speed of money supply in the economic sector. As a result, the Central Bank's monetary policy will be more effective in achieving its core objectives. Therefore, banking competition contributes to the economic growth of the country. In addition, the monetary policy of the Central Bank concentrates on financial stability, which is one of the fundamental factors in the economic development of a country.

scholarly journals Banking sector reforms in Kenya: Progress and challenges

2012 ◽  
Vol 10 (1) ◽  
pp. 88-96
Author(s):  
Sheilla Nyasha ◽  
Nicholas M. Odhiambo
Keyword(s):  
Central Bank ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Banking Sector ◽  
Banking System ◽  
Capital Adequacy ◽  
Financial Systems ◽  
African Countries ◽  
High Interest Rate ◽  
The Past

This paper gives an overview of the banking sector in Kenya; it highlights the reforms since the country‟s independence in 1963; it tracks the growth of the banking sector in response to the reforms implemented over the past four decades; and finally, it highlights the challenges facing the banking sector in Kenya. The country‟s banking sector consists of more than 40 commercial banks, with the Central Bank of Kenya, which is the country‟s central bank, at the apex. Since the 1980s, the Kenyan government has implemented a number of banking sector reforms – in order to safeguard and improve the banking sector. The response to these reforms by the banking sector has been varied. As a result of these reforms, there has been a shift in the dominance from the State-owned banks to the private commercial banks. There has also been an improvement in the Central Bank‟s oversight of the financial institutions, and an enforcement of the banks‟ capital-adequacy requirements. By the standards of African countries, Kenya currently has one of the most developed banking systems in Africa. The country has enjoyed a substantial bank-based financial sector development over the years, and its institutional framework has also grown stronger. However, like many other developing countries‟ financial systems, the Kenyan banking system still faces wide-ranging challenges, such as high interest rate spreads and financial inclusion challenges

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