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1 – 10 of over 50000The Japanese ‘Big Bang’ is expected to cover almost all areas of the country's financial systems. Within the many, differing revolutionary changes, the ‘front runner’ is the…
Abstract
The Japanese ‘Big Bang’ is expected to cover almost all areas of the country's financial systems. Within the many, differing revolutionary changes, the ‘front runner’ is the reform of the Foreign Exchange Control Law. The objectives of the reform are to make the Tokyo market a global financial centre and to provide free and swift cross‐border transactions for Japanese investors. The principal changes are: (a) liberalisation of cross‐border capital transactions, and (b) the abolition of the authorised foreign exchange bank system and that of the designated securities firms.
The national objectives of forward exchange controls are to restrain speculation in foreign exchange, to limit international capital flows and to affect the forward exchange…
Abstract
The national objectives of forward exchange controls are to restrain speculation in foreign exchange, to limit international capital flows and to affect the forward exchange rates. Restrictions on forward transactions are economic welfare costs for enterprises and banks, which are analysed in terms of risk‐return and supply‐demand theory. Empirical answers to whether forward exchange control is really necessary await collection and disclosure of company currency exposure, which itself may contribute to the national objectives implicit in forward exchange controls.
Serdar Ogel, Adem Boyukaslan and Semih Acikgozoglu
The present study aims to reveal knowledge, report on perception level and look at the evaluation of exchange rate risk management techniques of enterprises registered to…
Abstract
The present study aims to reveal knowledge, report on perception level and look at the evaluation of exchange rate risk management techniques of enterprises registered to Afyonkarahisar Chamber of Commerce and Industry. In order to achieve this, the authors conducted a study that included a field-survey and consisted of 223 enterprises that have foreign trade transactions in Afyonkarahisar city. The data that were used in the analysis had been collected via a survey and they were statistically evaluated by SPSS program.
Within the scope of the study, the authors investigated the determination of corporational identity of the sampled manufacturing enterprises, organisational structure of finance departments, determination of ownership structures of these enterprises, determination of foreign exchange risk perceptions, classification of exchange rate risks according to industry type and the determination of risk management instruments such as internal and external hedging strategies and information and usage levels of derivative instruments.
The most important result obtained in the study is that the majority of the companies, which operate in a competitive environment, are intensely exposed to foreign exchange risk but try to overcome the foreign exchange risk using traditional internal firm-level hedging methods instead of well-reputed external hedging methods or derivative instruments. Firms declared to be out of knowledge – by any means – for derivative instruments as the main reason for not utilising a well-reputed external foreign exchange risk management techniques.
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Controls on short‐term capital inflows or panic‐driven capital outflows may benefit emerging markets that have fragile financial sectors and adjustable‐peg currency regimes…
Abstract
Controls on short‐term capital inflows or panic‐driven capital outflows may benefit emerging markets that have fragile financial sectors and adjustable‐peg currency regimes. However, the controls seen so far are relatively easy to evade, often complex and obscure, and supported by large corruptible bureaucracies. A tax on foreign‐exchange payments avoids these drawbacks. It is transparent, inexpensive to set up and operate, administratively lean, and easy to adjust. A Tobin tax in effect, it is enforceable even when applied unilaterally.
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The purpose of this paper is to develop a step-by-step procedure, referred to as transaction formalism protocol (TFP) that the transaction development personnel will use to…
Abstract
Purpose
The purpose of this paper is to develop a step-by-step procedure, referred to as transaction formalism protocol (TFP) that the transaction development personnel will use to formalise transactions (communications) in the domain of infrastructure management. The protocol is developed at two levels of abstraction: TFP specification and TFP tool. This paper presents the TFP specification in detail and introduces the TFP tool briefly. The specific focus of this paper is on the development process of the protocol specification.
Design/methodology/approach
A four-step approach is used to develop the TFP; including, identify and select existing standards, benchmark standards, link and build on these standards, and develop TFP. To develop the protocol, the function modelling standard, integration definition function modelling (IDEF0) is used. The IDEF0 treats each step of the protocol as a function.
Findings
The TFP specification and TFP tool are developed using the proposed methodology. The TFP specification specifies inputs, controls, mechanisms, tools/techniques, and outputs required in each step, whereas the TFP tool defines forms for each step of the protocol that the transaction development personnel will use to define transactions in the domain of infrastructure management.
Practical implications
The development of the TFP would enable the transaction development personnel (including transaction analysts, transaction designers, software developers, process modellers, and industry experts) to formalise transactions effectively and efficiently for the development of ICT-based collaboration systems.
Originality/value
The proposed protocol incorporates shortcomings of existing standards. In contrast to other design standards that focus on either design or design cum implementation of the work processes and communications, the proposed TFP includes transaction monitoring and improvements in addition to the design and implementation of communications. Unlike other standards, the TFP is a detailed step-by-step procedure to ease its usability and understandability.
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Richard Olsen, Stefano Battiston, Guido Caldarelli, Anton Golub, Mihail Nikulin and Sergey Ivliev
This paper aims to explain the architecture and design choices of the exchange. Lykke is a FinTech company based in Zurich that has launched the global marketplace for all asset…
Abstract
Purpose
This paper aims to explain the architecture and design choices of the exchange. Lykke is a FinTech company based in Zurich that has launched the global marketplace for all asset classes and instruments digitized on the blockchain. The authors discuss how the exchange will evolve over time. They explore the macroeconomic benefits of the new blockchain technology. The Lykke exchange is compatible with any type of public blockchain.
Design/methodology/approach
The authors present the architecture of an exchange for colored coins. By colored coins, they mean issuer-backed securities on the Bitcoin blockchain. Orders are collected and matched by a semi-trusted exchange. Matched orders are settled on the Bitcoin blockchain, where each successful trade between parties appears as a set atomic-colored coins swap transactions. Unfilled and expired orders are discarded. The exchange does not take possession of the traded coins, but needs to be trusted to match trades correctly.
Findings
Lykke has launched the exchange initially for the main currencies, cryptocurrencies and Lykke coin (entitlement to the shares of Lykke company). Perspective asset classes include futures and options on digital assets, crowd-funded loans for retail and private equity financing for small and medium-sized enterprises, contracts for difference, zero coupon bonds and other fixed income and natural capital bonds.
Originality/value
Lykke exchange and all its tools and services are open source; the transparency of technology is ideal for research. The paper provides a high-level overview of the exchange and concludes with a research agenda.
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The aim of this paper is to assess the relevance of cryptocurrencies with regard to the money laundering risk on the market and to present widespread money laundering techniques…
Abstract
Purpose
The aim of this paper is to assess the relevance of cryptocurrencies with regard to the money laundering risk on the market and to present widespread money laundering techniques and recognizable patterns of abuse. In addition, this paper aims to find an answer to the question to what extent the measures of the fifth EU Anti-Money Laundering Directive (AMLD) as well as other appropriate preventive measures are sufficient to reduce the money laundering risk in the area of virtual currencies (VC).
Design/methodology/approach
Firstly, the analysis requires a consideration of the theoretical foundations of money laundering methods, as well as a presentation of the technical foundations of cryptocurrencies and their ecosystem. Secondly, it is discussed to what extent VC are suitable for money laundering, which characteristics enable them to launder money and which new money laundering techniques result from this. In addition, a comparison of different money laundering risk classification is done in relation to VC from the perspective of different actors in the financial market.
Findings
Owing to their simple electronic storage and transferability, crypto assets pose a concrete risk of money laundering. Their inclusion in the fifth AMLD was therefore a necessary step by the European legislator. However, the question arises to whether the directive and the further preventive measures presented in this paper sufficiently fulfil the objective of reducing the money laundering risk in relation to VC. One positive aspect is the inclusion of the crypto custody business as a financial service in the German Banking Act. According to the definition in Section 1 (1a) sentence 2 no. 6, the offering of wallets is subject to authorization and the offering party becomes an obligated party within the meaning of the Germany Money Laundering Act. From a supervisory point of view, the new licensing requirement is very much welcomed, as the custody of private cryptographic keys entails considerable risks. However, non-custodian wallet providers who do not store the private keys of their users, are not covered. A closer analysis of the amending directive to the fourth EU AMLD reveals that other relevant players in the crypto market, such as mixer and tumbler services, are also not covered.
Originality/value
It is quite clear that cryptocurrencies and the blockchain technology will continue to accompany one in the coming years. Further credit institutions arising in the market exposed to the described risks will be seen. The paper will therefore present and evaluate possible risk reduction/options for anti-money laundering for new and existing financial institutions.
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Neoclassic economics is a thing of considerable beauty. It yet finds an increasing tendency on the part of those trained in its discipline to rebel from its neatly fitted…
Abstract
Neoclassic economics is a thing of considerable beauty. It yet finds an increasing tendency on the part of those trained in its discipline to rebel from its neatly fitted abstractions and intriguing diagrams. The rebellion stems from two sources. Veblen's sweeping attacks upon its postulates16 shock its theoretical foundations. The rapid changes in the industrial and business world discredited it on another front by bringing into increasingly sharp relief the divergence between the institutional assumptions of the orthodox theory and the conditions actually obtaining. The giant corporation, overhead costs, and the necessity for maintenance of volume, industrial concentration, the trade association, a widening spread among income classes, advertising, the growing inability of the consumer to gauge quality, the resort to reorganization instead of the “going out of business” of the long-run analyses – what place could the orthodox theory give to these important characteristics of the existing business economy?
Eric Pettersson Ruiz and Jannis Angelis
This study aims to explore how to deanonymize cryptocurrency money launderers with the help of machine learning (ML). Money is laundered through cryptocurrencies by distributing…
Abstract
Purpose
This study aims to explore how to deanonymize cryptocurrency money launderers with the help of machine learning (ML). Money is laundered through cryptocurrencies by distributing funds to multiple accounts and then reexchanging the crypto back. This process of exchanging currencies is done through cryptocurrency exchanges. Current preventive efforts are outdated, and ML may provide novel ways to identify illicit currency movements. Hence, this study investigates ML applicability for combatting money laundering activities using cryptocurrency.
Design/methodology/approach
Four supervised-learning algorithms were compared using the Bitcoin Elliptic Dataset. The method covered a quantitative analysis of the algorithmic performance, capturing differences in three key evaluation metrics of F1-scores, precision and recall. Two complementary qualitative interviews were performed at cryptocurrency exchanges to identify fit and applicability of the algorithms.
Findings
The study results show that the current implemented ML tools for preventing money laundering at cryptocurrency exchanges are all too slow and need to be optimized for the task. The results also show that while not one single algorithm is most suitable for detecting transactions related to money-laundering, the specific applicability of the decision tree algorithm is most suitable for adoption by cryptocurrency exchanges.
Originality/value
Given the growth of cryptocurrency use, this study explores the newly developed field of algorithmic tools to combat illicit currency movement, in particular in the growing arena of cryptocurrencies. The study results provide new insights into the applicability of ML as a tool to combat money laundering using cryptocurrency exchanges.
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