Showing papers on "Currency published in 2022"

Analysis of Cryptocurrency, Bitcoin and the Future

Abstract: Technology advances at a rapid rate, and the success of a given technology is almost solely dictated by the market upon which it seeks to improve. Cryptocurrencies may revolutionize digital trade markets by creating a free flowing trading system without fee. The rapid development and growth in the field of information and communication technologies has changed our day to day life. Not only day to day it has changed our traditional pattern of banking and financial transactions. This advancement of information communication technology has helps to use of paper work activities into digital operations. The upgraded technologies have also changed the pattern of financial transactions as well as created a new form of money. Cryptocurrencies are not likely to replace traditional fiat currency, they could change the way internet connected global markets interact with each other, clearing away barriers surrounding normative national currencies and exchange rates. Cryptocurrencies may revolutionize digital trade markets by creating a free flowing trading system without fees. Bitcoin is presented which illuminates some of the recent events and movements that could influence whether bitcoin contributes to a shift in economic paradigms.

An Equilibrium Model of the International Price System

Abstract: What explains the central role of the dollar in world trade? Will the US currency retain its dominant status in the future? This paper develops a quantitative general equilibrium framework with endogenous currency choice that can address these questions. Complementarities in price setting and input-output linkages across firms generate complementarities in currency choice making exporters coordinate on the same currency of invoicing. The dollar is more likely to play this role because of the large size of the US economy, a widespread peg to the dollar, and the history dependence in currency choice. Calibrated using the world input-output tables and exchange rate moments, the model can successfully replicate the key empirical facts about the use of currencies at the global level, across countries, and over time. According to the counterfactual analysis, the peg to the dollar in other economies ensures that the US currency is unlikely to lose its global status because of the falling US share in the world economy, but can be replaced by the renminbi in case of a negative shock in the US economy. If the peg is abandoned, the world is likely to move to a new equilibrium with multiple regional currencies. (JEL D21, E31, E42, F14, F31, F33)

Central Bank Digital Currency: Welfare and Policy Implications

Abstract: A model of banking and means of payment is constructed to analyze the effects of the introduction of central bank digital currency (CBDC). That CBDC is interest bearing is not an advantage, as replacement of physical currency with CBDC does not expand the attainable set of equilibrium allocations. CBDC can increase welfare by competing with private means of payment and shifting safe assets from the private banking sector to what is effectively a narrow banking facility. This uses the aggregate stock of safe collateral more efficiently, given incentive problems in private banking.

Does the Russia-Ukraine war lead to currency asymmetries? A US dollar tale

Abstract: We examine the impact of the Russia-Ukraine war on the value of global currencies against the US dollar (USD) using event study methodology and market model estimates. We show that the Russia-Ukraine conflict had a negative impact on the value of the global currencies; however, a region-by-region analysis shows that while European currencies (particularly the Russian rouble, Czech koruna, and Polish zloty) depreciated against the USD, Pacific currencies appreciated significantly, and the currencies of the Middle East and Africa (ME&A) are insignificant. We also show that due to the financial and economic sanctions imposed on Russia, as well as Poland and the Czech Republic's proximity to the war zone, their currencies have weakened significantly against the USD. Furthermore, the Russian Central Bank's announcement to peg the rouble with gold, has had a significant positive impact on the pan-American, European (particularly the Russian rouble and the Polish zloty), and ME&A currencies. The analysis reveals a group of currencies that are unaffected by exogenous shocks. Incorporating these stable currencies into a portfolio would reduce the risk of volatile currencies. Future research can help gain additional insights by combining them with other major currencies such as the Chinese yuan, Japanese yen, British pound, and euro.

Central bank digital currency research around the world: a review of literature

Abstract: Purpose The purpose of this paper is to gain some insight into central bank digital currency research by reviewing the recent advances in central bank digital currency (CBDC) research in a way that would help researchers, policy makers and practitioners to take a closer look at CBDC. Design/methodology/approach The paper uses a systematic literature review methodology. Findings The review shows a general consensus that a CBDC is a liability of the central bank and it has cash-like attributes. The review also presents the motivation and benefits of issuing a CBDC such as the need to increase financial inclusion, the need to improve the conduct of monetary policy and to foster efficient digital payments. The review also shows that many central banks are researching the potential to issue CBDCs due to its many benefits. However, a number of studies have called for caution against over-optimism about the potential benefits of CBDC due to the limiting nature of CBDC design and its inability to meet multiple competing goals. Suggested areas for future research are identified such as the need to find the optimal CBDC design that meets all competing objectives, the need for empirical evidence on the effect of CBDC on the cost of credit and financial stability, and the need to find a balance between limiting the CBDC holdings of users and allowing users to hold as much CBDC as they want, and there is a need to undertake country-specific and regional case studies of CBDC design. Originality/value This review paper offers new areas for further research in central bank digital currencies.

A Bibliometric Analysis of Blockchain Technology Research Using VOSviewer

Abstract: Blockchain technology remains popular for several reasons. The main one is that it has facilitated the rise of digital currencies over the past several years and many other uses of non-crypto currency. There is a belief that the technology itself could far exceed cryptocurrencies by its impact. Thus, researchers are still discovering the real potential of blockchain. This study aims to conduct a comprehensive blockchain analysis with a bibliometric study. The data was retrieved from the Scopus database and was analyzed using the VOSviewer software, developed at Leiden University’s Centre for Science and Technology Studies (CWTS), Leiden University, the Netherlands. The study is based on the analysis of 1842 documents published in the 2007–2021 period using Scopus. From the visualization, three main groups of six clusters are generated. The red area includes topics related to blockchain technology, supply chain management, and sustainable development. The green cluster stands for such keywords as blockchains, smart contracts, electronic money, and Bitcoin and Ethereum. The blue cluster area focuses on issues related to artificial intelligence, big data, health care, and COVID-19. The analysis helps to improve the quality of the review by directing researchers to the most significant documents and mapping areas of publications.

Future Ready Banking with Smart Contracts - CBDC and Impact on the Indian Economy

Abstract: India is significantly diverse in culture and how it promotes business transactions. Though we are very acquainted with cash, cards, and online mode of payment, the Indian rural economy still believes in the barter system. At this juncture, India is evolving as a tech power house, and its economy is thriving to embrace cryptocurrency as a medium of exchange. After the Indian finance minister declared the same last February that India is working towards building its legal tender called Central Bank-backed Digital Currency (CBDC), this paper is making an impact in explaining our strengths, weakness, market readiness, and necessity to adopt a digital rupee when India's economy is highly regarded as a cashoriented economy. Is our country ready to accept the new technological shift in smart banking in the form of a digital rupee? The paper highlights the socioeconomic and technical challenges our planners need to understand before changing the Central banks' monetary policies. The deployment of fifth-generation (5G) cellular network technology has sparked renewed interest in the potential of blockchain to automate different cellular network use cases. 5G is projected to open up new market prospects for small and large businesses. The article highlights the unique instrument of the digital rupee to enhance peer-to-peer transactions with the evolution of 5G mobile technology.

The Cowrie Currencies of West Africa

Abstract: The cowrie shells of West African commerce have been almost exclusively the shells of Cypraea moneta and Cypraea annulus, both Indian Ocean species, the former from the Maldive Islands, the latter from the East African coast and islands, especially Zanzibar and the neighbouring islands. Shells of the species Cypraea moneta have been in use as money in various parts of the world for at least 1,000 years; they continued in use, on a limited scale, in parts of West Africa and Bengal up to the present century, and arc still in use, as a regular market currency for small purchases, in at least one West African area to this day. The quantity of cowries imported depended on the export of palm oil; the quantity which the economy could absorb depended on the expansion of the local internal exchange economy. The economy of the cowrie-using area of the Gold Coast was expanding in a very literal way.

The Currency of Politics

Abstract: Money in the history of political thought, from ancient Greece to the Great Inflation of the 1970s In the wake of the 2008 financial crisis, critical attention has shifted from the economy to the most fundamental feature of all market economies—money. Yet despite the centrality of political struggles over money, it remains difficult to articulate its democratic possibilities and limits. The Currency of Politics takes readers from ancient Greece to today to provide an intellectual history of money, drawing on the insights of key political philosophers to show how money is not just a medium of exchange but also a central institution of political rule. Money appears to be beyond the reach of democratic politics, but this appearance—like so much about money—is deceptive. Even when the politics of money is impossible to ignore, its proper democratic role can be difficult to discern. Stefan Eich examines six crucial episodes of monetary crisis, recovering the neglected political theories of money in the thought of such figures as Aristotle, John Locke, Johann Gottlieb Fichte, Karl Marx, and John Maynard Keynes. He shows how these layers of crisis have come to define the way we look at money, and argues that informed public debate about money requires a better appreciation of the diverse political struggles over its meaning. Recovering foundational ideas at the intersection of monetary rule and democratic politics, The Currency of Politics explains why only through greater awareness of the historical limits of monetary politics can we begin to articulate more democratic conceptions of money.

Socio-economic impact due to COVID-19: An Empirical Assessment

Abstract: Starting from December 2019, the novel COVID-19 threatens human lives and economies across the world. It was a matter of grave concern for the governments of all the countries as the deadly virus started expanding its paws over neighboring regions of infected areas. The spread got uncontrollable, thereby leaving no choice for the nations but to impose and observe nationwide lockdown. The lockdown further sorely hit many sectors, which in turn impacted the economy. Manufacturing, agriculture, and the service sector - the three pillars of the economy - have been adversely affected giving a major slow down to the economy belonging to every nation. Several schemes and policies were introduced by different state and central governments to absorb the impact of subsequent lockdowns on individuals. In this paper, we present a then and now analysis of the economy using a socioeconomic framework focusing on factors- unemployment, industrial production, import-export trade, equity markets, currency exchange rate, and gold and silver prices. For all these, we consider India as a case study because the Indian sub-continent has a wide landscape and rich cultural heritage presenting itself as a potential hub for economic activities. A thorough assessment has been made for the period January 2020- June 2020. The assessment will be beneficial to observe the long-term impact of any infectious disease outbreak such as COVID-19 locally and globally.

Stablecoins: Growth Potential and Impact on Banking

Abstract: Stablecoins have experienced tremendous growth in the past year, serving as a possible breakthrough innovation in the future of payments. In this paper, we discuss the current use cases and growth opportunities of stablecoins, and we analyze the potential for stablecoins to broadly impact the banking system. The impact of stablecoin adoption on traditional banking and credit provision can vary depending on the sources of inflow and the composition of stablecoin reserves. Among the various scenarios, a two-tiered banking system can both support stablecoin issuance and maintain traditional forms of credit creation. In contrast, a narrow bank approach for digital currencies can lead to disintermediation of traditional banking, but may provide the most stable peg to fiat currencies. Additionally, dollar-pegged stablecoins backed by adequately safe and liquid collateral can potentially serve as a digital safe haven currency during periods of crypto market distress.

Socioeconomic impact due to COVID-19: An empirical assessment

Abstract: Starting from December 2019, the novel COVID-19 threatens human lives and economies across the world. It was a matter of grave concern for the governments of all the countries as the deadly virus started expanding its paws over neighboring regions of infected areas. The spread got uncontrollable, thereby leaving no choice for the nations but to impose and observe nationwide lockdown. The lockdown further sorely hit many sectors, which in turn impacted the economy. Manufacturing, agriculture, and the service sector - the three pillars of the economy - have been adversely affected giving a major slow down to the economy belonging to every nation. Several schemes and policies were introduced by different state and central governments to absorb the impact of subsequent lockdowns on individuals. In this paper, we present a then and now analysis of the economy using a socioeconomic framework focusing on factors- unemployment, industrial production, import-export trade, equity markets, currency exchange rate, and gold and silver prices. For all these, we consider India as a case study because the Indian sub-continent has a wide landscape and rich cultural heritage presenting itself as a potential hub for economic activities. A thorough assessment has been made for the period January 2020- June 2020. The assessment will be beneficial to observe the long-term impact of any infectious disease outbreak such as COVID-19 locally and globally.

Uncertain hypothesis test for uncertain differential equations

Abstract: Uncertain hypothesis test is a statistical tool that uses uncertainty theory to determine whether some hypotheses are correct or not based on observed data. As an application of uncertain hypothesis test, this paper proposes a method to test whether an uncertain differential equation fits the observed data or not. In order to demonstrate the test method, some numerical examples are provided. Finally, both uncertain currency model and stochastic currency model are used to model US Dollar to Chinese Yuan (USD–CNY) exchange rates. As a result, it is shown that the uncertain currency model fits the exchange rates well, but the stochastic currency model does not.

Gross Capital Flows by Banks, Corporates, and Sovereigns

Abstract: Abstract We construct a new quarterly data set of international capital flows broken down by sector—banks, corporates, and sovereigns—and demonstrate the importance of distinguishing capital flows by the sector of domestic borrowers and lenders. We document four new sets of facts. First, banks account for the largest part of the external debt (stocks and flows) in advanced economies, whereas in emerging markets, banks, corporates, and sovereigns have roughly equal shares. Second, the high correlation between total capital inflows and outflows documented in the literature is driven by banking sector flows; that is, domestic banks’ borrowing from foreigners is highly correlated with domestic banks’ lending to foreigners. Third, sovereign flows behave very differently from and often act as a countervailing force to private sector (banking and corporate) flows, especially in emerging markets. Fourth, different shocks (global financial cycles versus domestic business cycles; banking versus currency versus sovereign crises) generate very distinct patterns of capital inflows and outflows by sector. The stylized facts we document deepen our understanding of the dynamics and behavior of capital flows and have important implications for open economy models.

OUP accepted manuscript

Abstract: Abstract We study how introducing a central bank digital currency affects equilibrium allocations and welfare in an environment where both currency and bank deposits are used in exchange. We highlight an important policy tradeoff: while a digital currency tends to improve efficiency in exchange, it may also crowd out bank deposits, raise banks’ funding costs, and decrease investment. We derive conditions under which targeted digital currencies, which compete only with physical currency or only with bank deposits, raise welfare. If such targeted currencies are infeasible, we illustrate the policy tradeoffs that arise when issuing a single, universal digital currency.