scholarly journals Central Bank digital currencies

Bankarstvo ◽  
2021 ◽  
Vol 50 (3) ◽  
pp. 109-139
Author(s):  
Vesna Martin
Keyword(s):  
Central Bank ◽  
Financial Stability ◽  
Central Banks ◽  
Modern World ◽  
Digital Form ◽  
Technological Transformation ◽  
Advantages And Disadvantages ◽  
Digital Currency ◽  
The Social

Central Bank digital currencies are a digital challenge to the international monetary and financial system. Since the development of cryptocurrency, such as bitcoin, the modern world has faced the possibility of digital technological transformation and providing a digital form of payment for the economy and the household. In addition, the announcement of a digital currency that would have a global reach, such as the Libre issued by the social network Facebook, raised questions about legal and regulatory safeguards, financial stability, and the role of the digital currency in society. All this influenced the leading central banks to recognize the need to conduct a detailed analysis of the possibilities of issuing digital currency of the central bank, which would be a supplement to the cash and non-cash form of payment. These analyzes include considering the advantages and disadvantages of that currency, determining its design and technological solution, as well as the necessary regulatory adjustments. In the coming period, we will witness a technological transformation in the operations of central banks, which, as before, should take care of preserving price and financial stability as its main goals, but also respond to new challenges of digital business.

Central bank digital currency: the future of institutional changes in the banking sector

2021 ◽  
Vol 2021 (2) ◽  
pp. 26-48
Author(s):  
Volodymyr MISHCHENKO ◽  
◽  
Svitlana NAUMENKOVA ◽  
Svitlana MISHCHENKO ◽  
◽  
...  
Keyword(s):  
Central Bank ◽  
Financial Stability ◽  
Banking Sector ◽  
Central Banks ◽  
Credit System ◽  
Bank Supervision ◽  
Bank Of China ◽  
Digital Currency ◽  
Financial Monitoring ◽  
The Impact

The purpose of the article is to reveal the essence and features of the introduction of digital currency of central banks and their impact on the conditions of monetary policy, financial stability, as well as institutional transformations in the development of national banking systems. The study is based on an analysis of projects of issuance and use of digital currencies of the ECB and central banks of leading countries, as well as the results of pilot projects of the National Bank of China on the use of the digital yuan and NBU on the e-hryvnia circulation. It is proved that digital currency of the central bank should be considered as a new dematerialized form of national currency in addition to cash and non-cash forms. Particular attention is paid to the study of the impact of the use of digital currency by central banks on the main parameters of economic policy. The main directions of potential influence of digital currency use on transformation of mechanisms of realization of monetary, budgetary and tax, macroprudential policy, maintenance of financial stability, activization of action of channels of the monetary transmission mechanism, and also on reforming of system of the state financial monitoring and bank supervision are substantiated. It is determined that one of the consequences of the use of digital currency will be the ability to ensure full control over all monetary transactions, which will help reduce the shadow economy and corruption. Structural and logical schemes of centralized and decentralized models of issuance and circulation of digital currency of central bank have been developed, directions of changes in the structure and functions of commercial and central banks, as well as in the structure of the financial and credit system in general have been substantiated.

scholarly journals CENTRAL BANK DIGITAL CURRENCY: ECONOMIC AND LEGAL CHARACTERISTICS

2019 ◽  
pp. 94-100
Author(s):  
T.S. Hudima ◽  
V.A. Ustymenko
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Financial Stability ◽  
Banking System ◽  
Legal Framework ◽  
Central Banks ◽  
Digital Currency ◽  
Business Entities ◽  
The Right ◽  
Article 5

The article is devoted to identifying the peculiarities of the central bank digital currency (CBDC), explaining their impact on the monetary policy of the state, and identifying the prospects for the transformation of domestic banking legislation in connection with the implementation of the CBDC. It is noted that the scope of competence of the Central Bank and the legal basis for the issuance of the CBDC will depend on the economic and legal features of the digital currency, the degree of its impact on the monetary policy, the financial stability of the country’s economy and so on. In the process of forming the appropriate legal field and defining the conceptual apparatus in the sphere of emission and circulation of the CBDC, the peculiarities of the use of the latter in economic transactions and the specific functions not inherent in ordinary means of payment should be taken. СBDC initiatives will help: 1) progressively narrow the banking system at the level of the Central Banks (such as the Chicago Plan) by allowing individuals and businesses to deposit directly into the accounts of the Central Banks; 2) increasing confidence of economic entities and individuals in the financial system; 3) strengthening the financial stability of the economy (both domestically and globally). Granting business entities or individuals the right to store digital money directly with the Central Bank can give rise to two main directions of influence on monetary policy: first, to strengthen its transmission mechanism; secondly, lead to banks being disrupted. This may lead to some legal issues regarding (1) the NBU’s area of competence; (2) the constitutional foundations of the legal economic order (Article 5 of the ECU). In particular, it cannot be ruled out that centralization of the production, servicing, and management of the СBDC turnover may violate the principles of competition in business activities, prevent abuse of monopoly position in the market, etc. Keywords: monetary policy, central bank digital currency, financial stability, competence, legal framework, economic operations, issue.

Casting Light on Central Bank Digital Currency

Cryptoassets ◽  
2019 ◽  
pp. 307-340 ◽  
Author(s):  
Tommaso Mancini-Griffoli ◽  
Maria Soledad Martinez Peria ◽  
Itai Agur ◽  
Anil Ari ◽  
John Kiff ◽  
...  
Keyword(s):  
Central Bank ◽  
Financial Stability ◽  
Central Banks ◽  
End User ◽  
Staff Members ◽  
Fiat Money ◽  
Digital Currency ◽  
Policy Goals ◽  
Simple Question ◽  
Monetary Policy Effectiveness

Several central banks have begun actively investigating the possibility of issuing central bank digital currency (CBDC). This new central bank liability would be a widely accessible digital form of fiat money, intended as legal tender. This chapter aims to answer a simple question: Does CBDC offer benefits? On the demand side, would it satisfy end user needs better than other forms of money? And on the supply side, would issuing CBDC allow central banks to more effectively satisfy public policy goals, including financial inclusion, operational efficiency, financial stability, monetary policy effectiveness, and financial integrity? In short, is CBDC a desirable form of money given existing and rapidly evolving alternatives? The chapter includes a summary of pilot projects and studies from central banks exploring the possibility of issuing CBDC. The analysis is based on publicly issued materials and discussions with staff members at central banks and technology providers around the world.

scholarly journals From cash to central bank digital currencies and cryptocurrencies: a balancing act between modernity and monetary stability

2020 ◽  
Vol 47 (4) ◽  
pp. 911-938 ◽  
Author(s):  
Ansgar Belke ◽  
Edoardo Beretta
Keyword(s):  
Central Bank ◽  
Financial Stability ◽  
Service Providers ◽  
Central Banks ◽  
Payment Systems ◽  
Content Type ◽  
Paper Money ◽  
Payment Instruments ◽  
Tier System

PurposeThe paper explores the precarious balance between modernizing monetary systems by means of digital currencies (either issued by the central bank itself or independently) and safeguarding financial stability as also ensured by tangible payment (and saving) instruments like paper money.Design/methodology/approachWhich aspects of modern payment systems could contribute to improve the way of functioning of today's globalized economy? And, which might even threaten the above-mentioned instable equilibrium? This survey paper aims, precisely, at giving some preliminary answers to a complex – therefore, ongoing – debate at scientific as well as banking and political levels.FindingsThe coexistence of State's money (i.e. “legal tender”) and cryptocurrencies can have a disciplining effect on central banks. Nevertheless, there are still high risks connected to the introduction of central bank digital currency, which should be by far not considered to be a perfect substitute of current cash. At the same time, cryptocurrencies issued by central banks might be exposed to the drawbacks of cryptocurrencies without benefiting from correspondingly strong advantages. A well-governed two-tier system to be achieved through innovation in payment infrastructures might be, in turn, more preferable. Regulated competition by new players combined with “traditional” deposits and central bank elements remains essential, although central banks should embrace the technologies underlying cryptocurrencies, because risk payment service providers could move to other currency areas considered to be more appealing for buyers and sellers.Research limitations/implicationsWe do not see specific limitations besides the fact that the following is for sure a broad field of scientific research to be covered, which is at the same time at the origin of ongoing developments and findings. Originality and implications of the paper are, instead, not only represented by its conclusions (which highlight the role of traditional payment instruments and stress why the concept of “money” still has to have specific features) but also by its approach of recent literature's review combined with equally strong logical-analytical insights.Practical implicationsIn the light of these considerations, even the role of traditional payment systems like paper money is by far not outdated or cannot be – at this point, at least – replaced by central bank digital currencies (whose features based on dematerialization despite being issued and guaranteed by a public authority are very different).Social implicationsNo matter which form it might assume is what differentiates economic from barter transactions. This conclusion is by far not tautological or self-evident since the notion of money has historically been a great object of scientific discussion. In the light of increasingly modern payment instruments, there is no question that money and the effectiveness of related monetary policies have to be also explored from a social perspective according to different monetary scenarios, ranging from central bank digital currencies to private currencies and cash restrictions/abolition.Originality/valueThe originality/value of the following article is represented by the fact that it (1) refers to some of the most relevant and recent contributions to this research field, (2) moves from payment systems in general to their newest trends like cryptocurrencies, cash restrictions (or, even, abolition proposals) and monetary policy while (3) combining all elements to reach a common picture. The paper aims at being a comprehensive contribution dealing with "money" in its broadest but also newest sense.

Central Bank Digital Currency and Financial Stability in a Dual Banking System

2020 ◽  
pp. 233-252
Author(s):  
Hichem Hamza ◽  
Khoutem Ben Jedidia
Keyword(s):  
Interest Rate ◽  
Central Bank ◽  
Financial Stability ◽  
Banking System ◽  
Central Banks ◽  
Peer To Peer ◽  
Payment Mechanism ◽  
Digital Currency ◽  
Pros And Cons ◽  
Open Question

The digitization of payment and the development of private digital currencies have constrained central banks to examine the issuance of their own central bank digital currency (CBDC) in order to face the competition of the new peer-to-peer payment system and the decline of cash use. This chapter addresses the topic of CBDC and places the discussion within the context of dual banking intermediation and financial stability. The design of CBDC in term of accessibility, anonymity, interest rate, and payment mechanism depends on the cryptocurrency use and money characteristics regarding the use of cash and deposit. The CBDC Sharia compliant, free of interest or PLS-based, fulfilling money value stability might be a solution. The effects of CBDC on banking intermediation and financial stability depend importantly on the CBDC design and switch significance of banks deposit to CBDC but remain an open question given the pros and cons arguments. In a dual banking system, Islamic banks could limit the disintermediation effect and maintain financial stability under Sharia compliance.

scholarly journals Legalization of Central Bank Digital Currency under Blockchain Industry

CONVERTER ◽  
2021 ◽  
pp. 450-458
Author(s):  
Yuting Hsu, Chengyong Liu
Keyword(s):  
Central Bank ◽  
Money Laundering ◽  
Consumer Protection ◽  
Legal System ◽  
Financial Stability ◽  
Central Banks ◽  
User Privacy ◽  
General Outline ◽  
The Public ◽  
Digital Currency

In recent years, private digital currency based on blockchainindustry has caused many doubts, such as privacy infringement, money laundering tools, consumer protection and financial stability. However, as digital currency has gradually become the important issue, the central banks of various countries have already started to study the central bank digital currency (CBDC). In this paper, firstly, the concept of private digital currency and its derivative issues are explained. Secondly, based on the two chains scheme of the blockchain, a CBDC system is established to facilitate supervision, which stores and accesses transaction information and verification information separately to balance the user privacy security and the convenience of supervision. Meanwhile, the consortium blockchain is settled to the public chain to protect the reliability of the data. Moreover, although some countries have started to develop CBDC, laws and regulations which regulate various aspects of it are still deficient. Therefore, in this paper, in addition to proposing a general outline of the legal system regulating the CBDC, it also illustrates separately the monetary rights and obligations of the central bank, merchant banks and the public, which will be helpful for the future legal construction.

scholarly journals Developments in Monetary Policies before and after the Recent Financial Crisis and the Change in the Role of Central Banks

2014 ◽  
Author(s):  
Zekayi Kaya ◽  
Erkan Tokucu
Keyword(s):  
Financial Crisis ◽  
Central Bank ◽  
Financial Stability ◽  
Policy Instruments ◽  
Central Banks ◽  
Price Stability ◽  
Lender Of Last Resort ◽  
Monetary Policies ◽  
Recent Financial Crisis

During the historical process, application of the monetary policies and the roles of the central banks have changed within the framework of the developments in the world economy, problems encountered and the economic policies as a solution to these problems. The financial crises after 1990 and the recent financial crisis as the biggest experienced one after 1930s, caused an increase in the importance of the task of providing financial stability besides price stability and in this context in the function of “lender of last resort” of the central bank. The crisis required using new policy instruments in addition to interest rate instrument which was not sufficient enough in providing financial stability and the roles of the central banks in providing financial stability changed. In this study, applications of monetary policies and the changing role of the central banks will be examined. Within this framework, traditional and non-traditional instruments will be explained and the problems that can be confronted by a central bank when providing price stability besides financial stability will be remarked.

scholarly journals Central Bank Digital Currency (CBDC) Sebagai Alat Pembayaran di Indonesia

2021 ◽  
Vol 4 (6) ◽  
pp. 2243
Author(s):  
Claudia Saymindo Emanuella
Keyword(s):  
Central Bank ◽  
Cyber Security ◽  
Legal Framework ◽  
Central Banks ◽  
Security Sector ◽  
Digital Currency ◽  
Payment Instruments ◽  
Digital Money ◽  
The Right

AbstractTechnological developments encourage innovation in various sectors, including banking. The widespread use of digital currencies is an impetus for central banks to create an alternative to replace ungoverned digital currencies. Central Bank Digital Currency (CBDC) is the alternative chosen by various central banks in the world. Various countries have conducted research related to the implementation in terms of design and risk in the financial, operational, and legal fields. Bank Indonesia plans to develop a CBDC as part of national economy and finance digitalization. Indonesia does not yet have a strong legal framework to underlie the implementation of CBDC, especially in the cyber security sector, The role of the central bank becomes very important in CBDC’s issuance and implementation as the only party that has the right to determine, issue, and regulate legal payment instruments in Indonesia.Keywords: Central Bank Digital Currency; Digital Money; Central Bank; Cybersecurity.AbstrakPerkembangan teknologi mendorong inovasi dalam berbagai sektor, termasuk perbankan. Maraknya penggunaan digital currency menjadi dorongan bagi bank sentral untuk menciptakan mata uang digital yang dapat menggantikan digital currency tanpa pihak berwenang. Central Bank Digital Currency (CBDC) menjadi alternatif yang dipilih oleh berbagai bank sentral di dunia, dan berbagai negara telah melakukan riset terkait penerapan CBDC dari sisi desain dan risiko di bidang finansial, operasional, dan legal. Bank Indonesia berencana untuk mengembangkan CBDC di Indonesia sebagai bagian dari digitalisasi ekonomi dan keuangan nasional. Indonesia belum memiliki kerangka hukum yang kuat untuk mendasari penerapan CBDC, terutama dalam bidang keamanan siber, mengingat banyaknya ancaman keamanan siber canggih yang terus berkembang. Peran bank sentral menjadi sangat penting dalam penerbitan dan penerapannya sebagai satu-satunya pihak yang berhak menentukan, menetapkan, menerbitkan, dan meregulasi alat pembayaran sah di Indonesia.Kata Kunci: Central Bank Digital Currency; Uang Digital; Bank Sentral; Cybersecurity.

scholarly journals MACROFINANCIAL RESPONSIBILITY OF CENTRAL BANKS: THEORETICAL FOUNDATIONS AND INSTITUTIONAL DILEMMAS

2017 ◽  
pp. 139-157
Author(s):  
Viktor KOZJUK
Keyword(s):  
Political Economy ◽  
Central Bank ◽  
Financial Stability ◽  
Institutional Design ◽  
Policy Instruments ◽  
Central Banks ◽  
Central Bank Independence ◽  
Macroeconomic Fluctuations ◽  
Price Stability

Introduction. Postcrisis tendency to enhance central bank’s macrofinancial responsibility should be related to real-financial inter-linkages rethinking but not to activistic demand management. Different approaches on how price stability and financial stability are inter-related, as well, as different institutional modalities of how to achieve them are making more complicate optimal institutional design of central bank with increased zone of responsibility. Purpose. Taking into account different macroeconomic viewpoints on the role of financial instability in macroeconomic fluctuations and institutional challenges for central bank independence the purpose of the paper is to validate that enhanced macrofinancial responsibility of central banks should be balanced by additional measures in direction to facilitate autonomous regulatory status. Results. Different views on how to enhance macroeconomic stability and what the role of central banks in new macrofinancial environment provide serious challenge for optimal designing of central bank’s macrofinancial responsibility. The problem not only relate to how price and financial stability are inter-related but also to how define the wrong way policy then price and financial stability are in non-linear relations. The difficulties in this segment may affect far reaching political consequences while assessing central bank from political economy point of view. Also it is necessary to take into account that macroprudential toolkit may overlap with monetary policy instruments providing additional regulatory distortions. Clear institutialisation of relations between price and financial stability responsibilities will help to avoid political economy type of manipulations with central bank new tasks. Priority of price stability should be kept while financial stability mandate should be clarified and tied to macroprudential regulation. In the same time more active central bank’s participance in the post-crisis economy should be based not on standard Keynesian activism but on enhanced financial responsibility balanced with protection of central bank independence in new regulatory areas. Conclusions. It the article it is stressed that enhanced macrofinancial responsibility should be based on unchanged priority of price stability mandate, increased level of central bank independence and coordination between monetary and macroprudential policies. It is shown that vulnerability of macrofinancial responsibilities to political pressure is going to increase. Political independence of central banks should protect them in the area of price stability and financial stability all together.

scholarly journals Political Power in Central Banks Is Essential to Avert Future Economic Crises

2020 ◽  
Vol 1 (3) ◽  
Author(s):  
Yuhang Liu
Keyword(s):  
Central Bank ◽  
Economic Crisis ◽  
Financial Stability ◽  
Global Economy ◽  
Political Power ◽  
Central Banks ◽  
Capital Flow ◽  
Economic Crises ◽  
European Central

In the era of globalization, Central banks have posed important impacts in the global economy. The central bank plays an important role in managing financial stability and capital flow, and avoiding economic crisis. Every central bank plays an important role in the country or region where it is located. The role of central banks in the global economy is examined below. As a functional department of a country or a region, the central bank inevitably embraces political power. In the process of argument, this paper takes the European central banks as an example to determine that the central bank should exercise its political power when facing the problem of avoiding the possible economic crisis in the future.

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