A Digital Currency Architecture for Privacy and Owner-Custodianship

Objective: to present the new approach to perform monetary transactions with digital currency.Methods: abstract-logical, analytical methods.Results: in recent years, electronic retail payment mechanisms, especially e-commerce and card payments at the point of sale, have increasingly replaced cash in many developed countries. As a result, societies are losing a critical public retail payment option, and retail consumers are losing important rights associated with using cash. To address this concern, we propose an approach to digital currency that would allow people without banking relationships to transact electronically and privately, including both e-commerce purchases and point-of-sale purchases that are required to be cashless.The article shows the advantages of cash payments compared to non-cash ones and defines the possibility to transform these advantages into the central bank digital currencies. The disputable issues of commercial banks development under the spread of digital currencies are discussed. The architecture of digital currencies is described, including distributed ledgers technology. It was shown that, for the digital currency to function effectively, it is necessary to include the privacy of end-users into its architecture; measures to achieve that are determined.Scientific novelty: the approached proposed in the article should be used to develop the digital currencies infrastructure. It should be government-backed, privately-operated and ensure that every transaction is registered by a bank or money services business, relying upon non-custodial wallets backed by privacy-enhancing technology, such as blind signatures or zero-knowledge proofs, to ensure that transaction counterparties are not revealed. This approach can also facilitate more efficient and transparent clearing, settlement, and management of systemic risk. We argue that our system can restore and preserve the salient features of cash, including privacy, owner-custodianship, fungibility, and accessibility, while also preserving fractional reserve banking and the existing two-tiered banking system.Practical significance: the proposed approach can be applied in the practical organization of perform monetary transactions using digital currencies.The article was first published in English language by Future Internet. For more information please contact the editorial office.For original publication: Goodell G., Al-Nakib H. D., Tasca P. A Digital Currency Architecture for Privacy and Owner-Custodianship, Future Internet, 2021, 13, 130. https://doi.org/10.3390/fi13050130Publication URL: https://www.mdpi.com/1999-5903/13/5/130

Government Borrowing and Crowding Out

We investigate the impact of fiscal expansions on firm investment by exploiting firms that have multiple banking relationships. Further, we conduct a localized RDD approach and compare the lending behavior of banks that barely met and missed the criteria of being a primary dealer, as well as barely winners and losers at government auctions. Our results indicate that a 1 percentage point increase in banks’ bonds-to-assets ratio decreases loans by up to 0.4%, which leads to significant declines in firm investment, profits and wages. Our findings are grounded in a quantitative model with financial and real sectors with which we undertake a welfare analysis and compute the cost of government borrowing on the overall economy.

Navigating the US “Green Rush”: anti-money laundering and de-risking implications for banking cannabis-related businesses in Jamaica

Purpose This paper aims to illuminate the diverging approaches to marijuana-related drug enforcement at the federal and state levels in the USA, which have facilitated a boom in the US medical cannabis industry (i.e. the “Green Rush”). It further sheds light on how the USA’ aggressive extraterritorial approach to anti-money laundering (AML) enforcement might simultaneously suppress the banking of cannabis-related businesses in Jamaica due to the lingering fear of de-risking. Design/methodology/approach An international and comparative legal and policy analysis was conducted of the nexus among shifting drug enforcement policies, AML laws and the banking of cannabis-related businesses. Findings This study found that the constitutional relationship between the US federal government and states has created a de facto comparative advantage for the US medical cannabis-related businesses that benefit from limited access to financial services. This was found to pose far-reaching implications for the banking and development of the Jamaican cannabis sector due to the dependence of the country’s financial institutions on correspondent banking relationships with the US banks that are regulated by federal AML statutes. Originality/value To the best of the author’s knowledge, this paper is the first of its kind to examine the extraterritorial regulatory risks to the banking of cannabis-related businesses in Jamaica.

A Digital Currency Architecture for Privacy and Owner-Custodianship

In recent years, electronic retail payment mechanisms, especially e-commerce and card payments at the point of sale, have increasingly replaced cash in many developed countries. As a result, societies are losing a critical public retail payment option, and retail consumers are losing important rights associated with using cash. To address this concern, we propose an approach to digital currency that would allow people without banking relationships to transact electronically and privately, including both e-commerce purchases and point-of-sale purchases that are required to be cashless. Our proposal introduces a government-backed, privately-operated digital currency infrastructure to ensure that every transaction is registered by a bank or money services business, and it relies upon non-custodial wallets backed by privacy-enhancing technology, such as blind signatures or zero-knowledge proofs, to ensure that transaction counterparties are not revealed. Our approach to digital currency can also facilitate more efficient and transparent clearing, settlement, and management of systemic risk. We argue that our system can restore and preserve the salient features of cash, including privacy, owner-custodianship, fungibility, and accessibility, while also preserving fractional reserve banking and the existing two-tiered banking system. We also show that it is possible to introduce regulation of digital currency transactions involving non-custodial wallets that unconditionally protect the privacy of end-users.

Modern financial and legal relations trends and economy digitalization

The article considers the trends in the development of financial and legal relations, which are caused by changes taking place in economic and social relations through the introduction of digital technologies. In conducting the study the authors analyzed the totality of currency, banking relationships, insurance relationships, budgetary legal relations and financial market relations. As a result of the study, the authors concluded that it is necessary to improve the mechanism of legal regulation of the use of such financial instruments as blockchain, cryptocurrency, etc., as well as the supervisory functions of the Bank of Russia credit bureaus in order to increase confidence in financial market participants.The authors also justify the need to introduce specific taxes (taxation on payments made for the purchase of goods and services over the Internet, or a tax on turnover from commercial activities on the world wide web) in order to prevent digital businesses from tax avoidance. An implication of the analyses is identifying tools that ensure a transparency of the budget system. Control approaches themselves have also been transformed. Thus, risk-based approaches have been used, as well as ratings of control objects by the level of reliability. It also requires further analysis of the regulatory tools that can be applied by public authorities, changes in the object and tax base, the procedure for collecting taxes, and possible tax benefits. The results can be used in further research to develop an effective legal mechanism for regulating financial and legal relations in modern economic condition.

Digital/Cashless Economy: The Changing Landscape of India

Digital/ Cashless banking has become talk of the town recently. People are opting for digital payments using mobile applications/wallets instead of cash and GOI/RBI is also promoting it through various schemes and incentivisation. This mode of payments has actually changed the dynamics of consumer and corporate relationships with their banks. Now, instead of taking out cash from our wallets, we open our mobile wallets to make payments or transfer money to someone. We do not wait for the bank branch to open and stand in long queues for getting our cash deposited in account neither we wait to withdraw cash. Likewise, we do not count cash at shopping counters and make the payment in a flash using our debit/ credit card. All this is possible because of the innovation in IT and its optimum utilization by our banks. The present paper will give an idea about what is this buzz word “Digital/ Cashless Banking” and how has it changed the banking relationships these days.