scholarly journals Money Creation in Fiat and Digital Currency Systems

2019 ◽  
Vol 19 (285) ◽  
Author(s):  
Marco Gross ◽  
Christoph Siebenbrunner
Keyword(s):  
Commercial Bank ◽  
Financial Institutions ◽  
Bond Market ◽  
Special Focus ◽  
Hypothetical Case ◽  
Macroeconomic Dynamics ◽  
Digital Currency ◽  
Bank Structure ◽  
Money Creation ◽  
Bank System

To support the understanding that banks’ debt issuance means money creation, while centralized nonbank financial institutions’ and decentralized bond market intermediary lending does not, the paper aims to convey two related points: First, the notion of money creation as a result of banks’ loan creation is compatible with the notion of liquid funding needs in a multi-bank system, in which liquid fund (reserve) transfers across banks happen naturally. Second, interest rate-based monetary policy has a bearing on macroeconomic dynamics precisely due to that multi-bank structure. It would lose its impact in the hypothetical case that only one (“singular”) commercial bank would exist. We link our discussion to the emergence and design of central bank digital currencies (CBDC), with a special focus on how loans would be granted in a CBDC world.

China’s forthcoming digital currency: implications for foreign companies and financial institutions in China

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Betty L. Louie ◽  
Martha Wang
Keyword(s):  
Financial Institutions ◽  
Private Equity ◽  
Global Scale ◽  
Mobile App ◽  
International Banking ◽  
Strategic Investment ◽  
Content Type ◽  
Foreign Companies ◽  
Legal Standards ◽  
Digital Currency

Purpose To answer key questions about China’s forthcoming digital currency, the Digital Currency Electronic Payment (DCEP) or “digital yuan.” Design/methodology/approach Discusses prospective legal standards and guidelines; expected features compared with traditional payment methods and other digital currencies; how DCEP works; status of pilot programs; use of DCEP for cross-border payments; transparency, data protection and cybersecurity issues; and key implications for foreign businesses and financial institutions in China. Findings When DCEP is officially launched in China, there is little doubt that the population can easily adapt to its use. The launch of DCEP can have significant ramifications on a global scale, as it could reduce China’s reliance on the SWIFT system for international banking and offers the first glimpse of the internationalization of the renminbi (RMB). Practical implications Foreign companies operating in China, hi-tech businesses, retailers, financial institutions, and mobile app developers need to track the development and acceptance of DCEP, monitor arising risks, assess how their financial products fit, and adjust business operations, reporting requirements and financial reserves related to the requirements and use of DCEP, expected growth in fintech surrounding digital currencies. Originality/value Practical advice from experienced mergers and acquisitions, private equity, strategic investment and capital markets lawyers.

Money creation in the modern economy: an appraisal

2021 ◽  
Vol 9 (1) ◽  
pp. 43-60
Author(s):  
Jacob Stevens ◽  
Keyword(s):  
Central Bank ◽  
Money Supply ◽  
Central Banks ◽  
Quantitative Easing ◽  
Digital Currency ◽  
Modern Economy ◽  
Money Creation ◽  
Floor System ◽  
Selection Of

This paper models a representative bank, and uses this model to explore the assumptions and implications of a selection of money-creation theories. It is shown that the money-supply process tends toward the logic of exogeneity as banks' fears about liquidity stress increases. At present, banks do not fear liquidity stress because central banks are operating under a floor system with a superabundance of reserves following unsterilized quantitative easing. Secondly, a role for a ‘central-bank digital currency’ is suggested as a useful complement to reserves policy in an economy with large or collusive banks.

Money laundering in a CBDC world: a game of cats and mice

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Daniel Dupuis ◽  
Kimberly Gleason ◽  
Zhijie Wang
Keyword(s):  
Money Laundering ◽  
Financial Institutions ◽  
Economic Activity ◽  
Design Methodology ◽  
Central Banks ◽  
Content Type ◽  
Digital Currency ◽  
Individual Privacy ◽  
The Impact ◽  
Practical Implications

Purpose The purpose of this study is to describe the present taxonomy of money, summarize potential central bank digital currency (CBDC) regimes that central banks worldwide could adopt and explore the implications of the introduction of each of these CDBC regimes for money laundering through the lens of the regulatory dialectic theory. Design/methodology/approach The methodology used in the analysis of significant recent events regarding the progress of central banks in establishing a CBDC and the implications for money laundering under a CBDC regime. This paper also reviews the literature regarding the Regulatory Dialectic to highlight potential innovative responses of money launderers to circumvent the controls generated through the implementation of a CBDC. Findings This study examines the impact of Kane’s regulatory dialectic paradigm on the feasibility of money laundering under a CBDC regime and identifies potential avenues that would be available for those seeking to launder money, based on the form a CBDC would take. Research limitations/implications This paper is unable as of yet to empirically evaluate anti-money laundering (AML) tactics under a CBDC regime as it has not yet been fully implemented. Practical implications Many central banks worldwide are evaluating the structure of and introduction of a CBDC. There are a number of forms that a CBDC could take, each of which has implications for individual privacy and for entities involved in AML efforts within financial institutions and the regulatory community. The paper has implications for AML experts who are considering how AML procedures would change under a CBDC regime. Social implications The regulatory dialectic predicts that regulatory response reactive, rather than proactive when it comes to socially undesirable phenomena. As central banks and governments seek to divert economic activity away from the laundering of the proceeds of illicit activity, there are tradeoffs in terms of a loss of privacy. The regulatory dialectic predicts a corresponding innovative response of those who wish to undermine the controls generated through the establishment of a CBDC. Originality/value To the authors’ knowledge, this is the first paper to explore the impact of a potential CBDC on money laundering and the potential innovative circumventions within the paradigm of the Regulatory Dialectic.

The measurement of commercial bank structure

1984 ◽  
Vol 12 (3) ◽  
pp. 81-81
Author(s):  
Dennis Placone
Keyword(s):  
Commercial Bank ◽  
Bank Structure

The IPO of Industrial and Commercial Bank of China and the ‘Chinese Model’ of privatizing large financial institutions

2012 ◽  
Vol 20 (7-9) ◽  
pp. 599-624 ◽  
Author(s):  
Franklin Allen ◽  
Jun ‘QJ’ Qian ◽  
Susan Chenyu Shan ◽  
Mengxin Zhao
Keyword(s):  
Commercial Bank ◽  
Financial Institutions ◽  
Bank Of China ◽  
Chinese Model

scholarly journals Risk Analysis and Suggestions on Bond Investment Transaction of Financial Institutions

2020 ◽  
Vol 5 (1) ◽  
pp. 1
Author(s):  
Zhewei Xu
Keyword(s):  
Risk Analysis ◽  
Financial Institutions ◽  
Bond Market ◽  
Risk Measurement ◽  
Credit Spread ◽  
Simple Analysis

<p>At present, the development of China's bond market is becoming more and more mature. However, with the continuous expansion of bond trading scale and the innovation of bond products, the risks existing in the transaction are also gradually increasing. Therefore, financial institutions, as the main investors in the bond market, should pay more attention to the measurement and avoidance of risks. Credit spread is an indicator of risk measurement. This paper compares the credit spread of four kinds of bonds through the statistics of their yields, and makes a simple analysis of their risks. Moreover, some suggestions are put forward for the bond investment of financial institutions, which may help them better avoid risks and make reasonable bond investment.</p>

scholarly journals Human Rights and Financial Institutions: Pinning the Responsibility

2013 ◽  
pp. 116-128
Author(s):  
Nidhi Modani
Keyword(s):  
Human Rights ◽  
World Bank ◽  
Financial Institutions ◽  
Developing Nations ◽  
Special Focus ◽  
International Financial Institutions ◽  
Human Right ◽  
The World Bank ◽  
The World ◽  
The International Monetary Fund

This paper is a study of the possible human right obligations of international financial institutions. As financial institutions have not been looked upon as agencies influencing or influenced by human rights, this study becomes significant. The study is limited to international financial institutions, with a special focus on the World Bank (hereinafter ‘Bank’) and the International Monetary Fund (hereinafter ‘Fund’ or ‘IMF’). 2 Further, there is a special focus on developing nations.3

scholarly journals Commercial Bank Money, Seigniorage, and the Macroeconomy

2018 ◽  
Author(s):  
Biagio Bossone
Keyword(s):  
Commercial Bank ◽  
Commercial Banks ◽  
Equilibrium Prices ◽  
Different Types ◽  
Money Creation ◽  
Fractional Reserves ◽  
Macroeconomic Implications ◽  
The Impact ◽  
The Relationship ◽  
Bank Money

This article evaluates the macroeconomic implications of commercial bank seigniorage, which emerges from the commercial banks&rsquo; power to create money in a fractional reserves regime. After evaluating the impact on aggregate output of commercial bank money relative to alternative exchange arrangements, the article identifies the determinants of commercial bank seigniorage and analyzes how equilibrium prices are determined in an economy where commercial banks extract seigniorage. The article also identifies the conditions under which commercial banks extract seigniorage, clarifies the relationship between seigniorage from commercial bank money creation and profits from pure financial intermediation, and shows how commercial bank seigniorage changes with different types of interbank payments settlement.

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