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Book part
Publication date: 28 September 2022

Chi Lo

Abstract

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The Digital Renminbi’s Disruption
Type: Book
ISBN: 978-1-80455-330-5

Book part
Publication date: 26 August 2019

Syed Fadhil Hanafi and Syed A Rahman

Regulation of digital currency is still at its infancy as authorities around the world grapple with its mechanics, and study its impact and the best method to regulate it…

Abstract

Regulation of digital currency is still at its infancy as authorities around the world grapple with its mechanics, and study its impact and the best method to regulate it. Significant increase in the use of digital cryptocurrency based on Blockchain technology post-Bitcoin phenomenon had challenged the conventional idea of central bank monopoly in currency issuance. This had also raised concern that digital currency being used as an instrumentality of crime given its anonymity feature that allows for the flow of funds without tracing and the fact that it is built on trustless system that provides security of transaction. This concern, plus other consideration including the prospect of issuing central bank digital currency, had driven some authorities around the world to adopt countermeasures either via an outright ban or a regulatory regime that suits the nature of digital currency, which is purely virtual and anonymous. However, in coming out with an appropriate legal regime, authorities faced multiple difficulties especially when the pace of legal development does not sync congruently with the rapid progress of technology. In addition, given the growing prominence of Islamic finance around the world, questions also arise pertaining to the legality of digital cryptocurrency from the Islamic perspective. Through a qualitative study of relevant literatures as well as legislations in different countries, this chapter discusses the various categories of digital currency, its position from the Islamic perspective, regulatory regimes of digital cryptocurrency in selected jurisdictions and challenges faced by authorities around the world in regulating this new medium of exchange.

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Emerging Issues in Islamic Finance Law and Practice in Malaysia
Type: Book
ISBN: 978-1-78973-546-8

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Book part
Publication date: 15 September 2022

Timotej Jagrič, Dušan Fister, Aleksandra Amon, Vita Jagrič and Sabina Taškar Beloglavec

Purpose: This chapter aims to lay out the issues regarding the world of digital currencies, private and central bank digital currency (CBDC). In that connection, the authors want…

Abstract

Purpose: This chapter aims to lay out the issues regarding the world of digital currencies, private and central bank digital currency (CBDC). In that connection, the authors want to, as much as possible, systematically present the terminology, examples of various digital currencies and the technology behind that phenomenon. The chapter also highlights the occurrence of CBDC and the possible implications of its introduction to day-to-day commercial banking practice, possibly taking the payment systems and transactions alternation, balance sheet and profits’ issues into consideration.

Need for the study: Digital currencies already have and are also soon going to have an enormous impact on society as such, where payments for everyday goods and services are taken on a whole new platform and level, in the sense of how the payments are made and payment systems are constructed, as also in the sense of quantity, as the number and sum-wise payments carried out via such platforms are growing.

Methodology: A triangulation method, a mixed qualitative methodological approach was implemented, so the research offers a synthesis of previously published contributions in this field, followed by deductive and inductive reasoning interconnected with descriptive and comparative analyses.

Findings: As digital currency already have a vast impact on payment systems and modes of payment, the CBDC, an imperative of today and not the matter of the future, will have implications for commercial banks, probably in the field of lowering banks’ commissions, no big customer data-selling ability, accumulating the deposits and deposit policies and credit policies due to higher funding costs for banks. There is an interwovenness among the central bank activities, bank customer’s behaviour and commercial bank activities. Therefore, the change of payment and spending behaviour of customers because of central banks’ introducing novelties will also have consequences for the banking industry.

Practical implications: The choice to handle cash or digital currency will be obsolete, and an individual’s or a firm’s financial knowledge must be upgraded in the field of new money using angles. The issue of digital currencies and CBDCs are no longer a matter of choice but are becoming a new reality. Therefore, it is necessary for the common public, economy and banking system, especially now carrying out most of payments and transfers of money, to study this field and foresee the possible consequences and risks emerging.

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The New Digital Era: Digitalisation, Emerging Risks and Opportunities
Type: Book
ISBN: 978-1-80382-980-7

Keywords

Article
Publication date: 20 September 2021

Christoph Wronka

The purpose of this paper is to discuss the effect of the issuance, adoption and use of digital currencies on economic sanctions with the focus being on the increasing risk of…

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Abstract

Purpose

The purpose of this paper is to discuss the effect of the issuance, adoption and use of digital currencies on economic sanctions with the focus being on the increasing risk of sanction evasion. The research sought to answer three key questions: What is the effect of digital currencies on economic sanctions? To what extent does the adoption and use of digital currencies increase the risk of sanction evasion? What remedial measures can be taken to enforce compliance with sanctions in the wake of increased adoption and use of digital currencies?

Design/methodology/approach

The research relied on secondary sources of data, using secondary research to collect archival data in the form of documents. Content and thematic analyses were used to synthesise the collected data.

Findings

It was found that digital currencies have significantly increased the risk of sanction evasion. This is because they facilitate the anonymous or pseudonymous conduct of international commercial transactions, which are hard or impossible to detect and track.

Originality/value

This research is the first to explore the different ways in which digital currencies as whole – and not just cryptocurrencies – affect compliance with economic sanctions.

Details

Journal of Financial Crime, vol. 29 no. 4
Type: Research Article
ISSN: 1359-0790

Keywords

Open Access
Article
Publication date: 29 March 2022

Uduak Michael Ekong and Christopher Nyong Ekong

This study aims to empirically investigate the effect of digital currency development (digital finance) on financial inclusion in Nigeria for the period. Nigeria undertook her…

6262

Abstract

Purpose

This study aims to empirically investigate the effect of digital currency development (digital finance) on financial inclusion in Nigeria for the period. Nigeria undertook her digital currency development to rip the benefits of financial inclusion, safer remittances and exchange rate regularization among others.

Design/methodology/approach

The researchers developed high-frequency quarterly data for the analysis from 2006:1 to 2020:4 in a weighted stepwise forward regression. A model similar to the one used by Demir et al. (2020) and Altunbas and Thornton (2019) with some modifications was developed.

Findings

Findings suggest that (1) a unit rise in the usage of automated teller machines by citizens spontaneously raised financial inclusion in a quarter in Nigeria by 0.012 units and were statistically significant; (2) a percentage rise in the use of point of sales transaction by citizens in the country also raised financial inclusion in Nigeria by approximately 1%; (3) a percentage increase by mobile payment users in Nigeria will spontaneously increase financial inclusion by at least 0.4%; (4) a percentage rise in web payment services reduces financial inclusion by 22% in Nigeria; (5) Cumulative positive effect of digital finances on financial inclusion in Nigeria was approximately 7%.

Practical implications

The researches show, using in-sample forecast, that while financial inclusion will grow in Nigeria, it will not be without systemic fluctuations. Based on the outcome, it is proposed that if the present digital currency penetration for the country is sustained at the present growth rate, the country may be more financially inclusive by 2% additionally by 2025 and 4% more by 2030.

Originality/value

Originally, it is found that digital currency development are positive derivatives for financial inclusion in Nigeria. Cumulatively, the effect of digital finances on financial inclusion in Nigeria is approximately 7% positive.

Details

Journal of Internet and Digital Economics, vol. 2 no. 1
Type: Research Article
ISSN: 2752-6356

Keywords

Book part
Publication date: 18 July 2022

Peterson K. Ozili

Purpose: This chapter aims to present the arguments for and against central bank digital currency (CBDC) increasing financial inclusion. Financial inclusion is one of the many…

Abstract

Purpose: This chapter aims to present the arguments for and against central bank digital currency (CBDC) increasing financial inclusion. Financial inclusion is one of the many reasons for issuing a CBDC.

Need for the study: There is a need to offer a critical perspective on the proposed financial inclusion benefits of CBDC. This is the first paper to present arguments supporting and statement against CBDC for financial inclusion.

Method: This chapter uses discourse analysis methodology to identify the arguments about CBDC promoting financial inclusion

Findings: The arguments in support of CBDC increasing financial inclusion are that CBDCs can digitise value chains, CBDCs can improve access to digital financial services, CBDCs can help to enlarge the digital economy, CBDCs can enhance the efficiency of digital payments, CBDCs can be used offline when there is no internet coverage, and CBDCs have low transaction costs. Some criticisms are that CBDC may not prioritise financial inclusion, a high price to purchase digital devices for holding a CBDC, non-interest-bearing CBDCs, the strong preference for cash over digital currency, the burdensome identification and regulatory requirements, and the imposition of transaction costs.

Implications: Overall, the arguments presented in this chapter show that there is still disagreement over whether a central bank’s digital currency can increase financial inclusion. Nevertheless, in the light of recent events, many central banks are determined to issue a CBDC for many reasons. Even though CBDCs do not achieve the intended financial inclusion objective, at least the other goals for publishing a CBDC will be performed, such as a significant reduction in cash management costs and the effective conduct of monetary policy.

Details

Big Data Analytics in the Insurance Market
Type: Book
ISBN: 978-1-80262-638-4

Keywords

Article
Publication date: 18 June 2021

Betty L. Louie and Martha Wang

To answer key questions about China’s forthcoming digital currency, the Digital Currency Electronic Payment (DCEP) or “digital yuan.”

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Abstract

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.

Details

Journal of Investment Compliance, vol. 22 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

Book part
Publication date: 16 January 2023

Dimitrios Salampasis, Patrick Schueffel, Russell Dominic and Duncan Cameron

This chapter reviews developments concerning central bank digital currencies (CBDCs). It introduces, analyzes, and discusses the potential implications of CBDCs on the existing…

Abstract

This chapter reviews developments concerning central bank digital currencies (CBDCs). It introduces, analyzes, and discusses the potential implications of CBDCs on the existing cryptoassets landscape. The chapter also provides an overview of the different approaches to adopting and implementing this new form of money. Additionally, it compares traditional cryptocurrencies, privately issued stablecoins, fiat currencies, and CBDCs. Although vastly divergent opinions exist on digital money’s purpose, benefits, and use cases, CBDCs can provide opportunities for innovation and experimentation at a central bank and systemic level. CBDCs may pave the way for democratizing access to unbundled financial services while rethinking the overall purpose of money, monetary systems, and global business.

Details

The Emerald Handbook on Cryptoassets: Investment Opportunities and Challenges
Type: Book
ISBN: 978-1-80455-321-3

Keywords

Article
Publication date: 7 January 2022

Peterson K. Ozili

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…

5209

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.

Book part
Publication date: 17 January 2023

Philipp Sandner and Jonas Gross

The digital euro is not a monolithic project. On the contrary, the application fields are broad, and possible solutions are diverse. This chapter provides an overview of use…

Abstract

The digital euro is not a monolithic project. On the contrary, the application fields are broad, and possible solutions are diverse. This chapter provides an overview of use cases, application domains, and infrastructures for the digital euro that differ significantly. A comparison with solutions for the digital dollar and the digital yuan leads to the conclusion that, in the most extreme case, the euro could become a regional currency for Europe. The main reason for this argument is the design and prioritization of current approaches within Europe as well as the European Central Bank’s digital euro project, and that stablecoin approaches seem to be neglected as solutions for the digital euro.

Details

Fintech, Pandemic, and the Financial System: Challenges and Opportunities
Type: Book
ISBN: 978-1-80262-947-7

Keywords

1 – 10 of over 6000