Designing New Money - The Policy Trilemma of Central Bank Digital Currency

Bjerg, Ole

doi:10.2139/ssrn.2985381

Cited by 61 publications

(33 citation statements)

References 7 publications

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“…However, there are some risks including 1) macroeconomic instability, 2) loss of monetary control, 3) systemic risks, 4) susceptible to severe downturns. Bjerg (2017) evaluates three different scenarios for the implementation of CBDC in terms of their monetary policy implications including 1) CBDC co-exists with cash and commercial bank deposits, 2) CBDC co-exists only with commercial bank deposits (cash abolished), 3) CBDC co-exist only with cash (commercial bank deposits abolished). The analysis is based on monetary policy trilemma formulated for the domestic economy with multiple forms of money.…”

Section: Including Central Bank Digital Currencies and The Shift To Amentioning

confidence: 99%

Fintech and the Future of Financial Services: What Are the Research Gaps?

Kavuri¹,

Milne²

2019

SSRN Journal

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New financial technologies (FinTech) have erupted around the world. Consequently, there has been a considerable increase in academic literature on FinTech over the last five years. Research tends to be scantily connected with no coherent research agenda. Significant research gaps and important questions remain. There is much work to be done before this area becomes an established academic discipline. This paper offers coherent research themes formulated through focus group meetings with policymakers and academics, and also based on a critical assessment of the literature. We outline seven key research gaps with questions that could form the basis of academic study. If these are addressed it would help this area become an established academic discipline. AbstractNew financial technologies (FinTech) have erupted around the world.Consequently, there has been a considerable increase in academic literature on FinTech over the last five years. Research tends to be scantily connected with no coherent research agenda. Significant research gaps and important questions remain. There is much work to be done before this area becomes an established academic discipline. This paper offers coherent research themes formulated through focus group meetings with policymakers and academics, and also based on a critical assessment of the literature. We outline seven key research gaps with questions that could form the basis of academic study. If these are addressed it would help this area become an established academic discipline.

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Section: Including Central Bank Digital Currencies and The Shift To Amentioning

confidence: 99%

Fintech and the Future of Financial Services: What Are the Research Gaps?

Kavuri¹,

Milne²

2019

SSRN Journal

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“…Another branch of scientific research concerns itself with central bank digital currency (CBDC) [11]- [14]. We deliberately chose not to cover this topic, since the central bank, as the central actor, remains in control of both monetary policy and mining.…”

Section: Related Workmentioning

confidence: 99%

Monetary Stabilization in Cryptocurrencies – Design Approaches and Open Questions

Pernice

Henningsen

Proskalovich

et al. 2019

2019 Crypto Valley Conference on Blockchain Technology (CVCBT)

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The price volatility of cryptocurrencies is often cited as a major hindrance to their wide-scale adoption. Consequently, during the last two years, multiple so called stablecoins have surfaced-cryptocurrencies focused on maintaining stable exchange rates. In this paper, we systematically explore and analyze the stablecoin landscape. Based on a survey of 24 specific stablecoin projects, we go beyond individual coins for extracting general concepts and approaches. We combine our findings with learnings from classical monetary policy, resulting in a comprehensive taxonomy of cryptocurrency stabilization. We use our taxonomy to highlight the current state of development from different perspectives and show blank spots. For instance, while over 91% of projects promote 1-to-1 stabilization targets to external assets, monetary policy literature suggests that the smoothing of short term volatility is often a more sustainable alternative. Our taxonomy bridges computer science and economics, fostering the transfer of expertise. For example, we find that 38% of the reviewed projects use a combination of exchange rate targeting and specific stabilization techniques that can render them vulnerable to speculative economic attacks-an avoidable design flaw.

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“…(Note 21) ECB (2012) cautions that crypto currencies could impact price stability and monetary policy if their proliferation reduces the demand for central bank liabilities and interferes with the central bank's control of money supply. Pfister (2017) emphasizes that the definitions of money aggregates and reserve ratios would need to be expanded to incorporate privately issued crypto currencies into these aggregates, which in part would reconstitute central bank's control of money aggregates (see Stevens (2017), Brasad (2018), Bjerg (2017), BIS (2018), Deloitte (2015) and European Parliament (2017a and2017b)).…”

Section: Impact On the Demand For Moneymentioning

confidence: 99%

Competing With Bitcoin - Some Policy Considerations for Issuing Digitalized Legal Tenders

Kovanen¹

2019

IJFR

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The proliferation of peer-to-peer virtual alternatives to traditional banknotes has raised concerns among policymakers about the future of traditional means of making payments and how it might affect monetary policy implementation and its effectiveness. This study provides a brief overview of the existing research in this area. It compares positions taken in the literature by authors on some of the key policy issues relevant for central banks when thinking about the issuance of digitalized legal tenders. We examine the implications of government issued digital alternatives to traditional currencies for monetary policy effectiveness, payments and settlements, and financial market stability. We also discuss recent advances in financial technology to improve the making of payments and settlements, which might help contribute to financial inclusion. At the same time, new technologies represent challenges for regulatory authorities, for instance related to efforts to contain anti-money laundering and prevent financing of terrorism. A number of authors argue that government issued digital currency is necessary to address the flaws in private crypto currencies, and to improve monetary policy effectiveness. Central banks have begun to analyze possible features of digitalized legal tenders, to better understand the policy considerations involved and effects these could have for interest rate transmission and financial markets, but there is no clear consensus on key modalities associated with digitalized legal tenders. Moreover, many central banks do not regard privately issued virtual currencies as a serious threat to traditional currencies. Given the ongoing debate, it is difficult to make firm predictions about the impact of central bank issued digital currencies on monetary policy transmission and financial markets at this point.

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Designing New Money - The Policy Trilemma of Central Bank Digital Currency

Cited by 61 publications

References 7 publications

Fintech and the Future of Financial Services: What Are the Research Gaps?

Fintech and the Future of Financial Services: What Are the Research Gaps?

Monetary Stabilization in Cryptocurrencies – Design Approaches and Open Questions

Competing With Bitcoin - Some Policy Considerations for Issuing Digitalized Legal Tenders

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