Significant Effect of the Central Bank Digital Currency on the Design of Monetary Policy

Purnawan, Muhammad Edhie; Riyanti, Retno

doi:10.52813/jei.v8i1.15

Cited by 4 publications

(2 citation statements)

References 15 publications

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“…Some other papers in the literature have examined the potential welfare losses and risks associated with the continuous clearing of cash, e-money, and the use of electronic money (See Jack et al, 2010). Studies have also attempted to address the implications of digital currencies, such as cryptocurrencies, on monetary policy (See Assenmacher, 2020;Tomić et al, 2020) and the consequences of Central Bank-Issued Digital Currency on monetary policy and financial system stability (See Nuño, 2018;Purnawan & Riyanti, 2019;Carapella & Flemming, 2020).…”

Section: Introductionmentioning

confidence: 99%

Monetary Policy Implications of Electronic Money Adoption: Evidence from Nigeria

Kelikume,

Otonne

2024

Preprint

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This study investigates the monetary policy implications of electronic money adoption in Nigeria; that is, whether the electronic money adoption that began since the introduction of the cashless policy in Nigeria has disrupted the long-run stability of demand for money function. The findings reveal substantial growth in the Nigerian financial sector concerning the development and usage of electronic money, encompassing the expansion of banks and bank branches, Automated Teller Machines, mobile payments, Point-of-sale systems, web payments, and transaction volumes and values. Results from the study obtained through the Autoregressive Distributed Lag model (ARDL) show a substantial likelihood of an unstable and unpredictable demand function over time, potentially undermining the long-term effectiveness of monetary policy. The study underscores that electronic money transactions exert linear and non-linear effects on money demand and the velocity of money in circulation exhibits some form of instability during the study period. Consequently, the monetary authority should remain vigilant in monitoring evolving payment patterns and trends to discern the shifting dynamics of cash demand. A grasp of emerging payment technologies and transaction patterns will empower policymakers to proactively adjust monetary policies and regulatory frameworks, aligning them with the requirements of a digital economy. This approach ensures a balanced interplay with the demand for cash, which is essential for transactional activities within the economy. JEL: G21, E41, E52, C22, N17

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Section: Introductionmentioning

confidence: 99%

Monetary Policy Implications of Electronic Money Adoption: Evidence from Nigeria

Kelikume,

Otonne

2024

Preprint

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“…The potential for Digital Rupiah as financing inclusion or exclusion is also a matter of particular concern. Especially now that the main challenge facing Indonesia is economic recovery which is still not optimal, one of which is the low inflation rate which is still below the central bank's target [7]. Then the normalization of monetary policy (tapering off) by the United States central bank creates uncertainty in the country's financial markets.…”

Section: Introductionmentioning

confidence: 99%

Digital Rupiah as a Proponent of Financial Inclusion: A Study of Legal Strengthening Aspects

Ayu Purnamawati,

Kharisma Nuryasinta,

Ramdhani Setyawan

et al. 2024

KSS

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The public’s need for a payment system that is fast and inexpensive but also secure, inspired Bank Indonesia to create a digital currency known as the Digital Rupiah. The basis for Bank Indonesia’s consideration of launching the Digital Rupiah is to carry out its mandate in the digital era in the form of legal digital payment instruments so that it can become a means of supporting financial innovation. However, the potential for Digital Rupiah as financing inclusion or exclusion is also a crucial matter that needs to be studied in more depth. This study uses a type of normative legal research with data sources through library research, which will analyze the potential for financial inclusion and exclusion and examine the strengthening of the Digital Rupiah from a legal perspective. The results of this study indicate that there is still potential for financial exclusion posed by Digital Rupiah, therefore a strategy is needed to open up opportunities for financial inclusion from Bank Indonesia, regulators, ministries, and other institutions in efforts to provide financial services to the wider communities. This also includes supporting greater digital economic and financial integration that are equitable and sustainable for all the people. The provisions for Digital Rupiah that have been embedded in the P2SK Law are still minimal because the provisions for managing them have not been fully explained. So it is necessary to strengthen the regulation of several aspects so that Digital Rupiah can become a financial inclusion requirement. Keywords: digital Rupiah, financial inclusion, legal reinforcement

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Implications of the Introduction of Retail Digital Currencies by Central Banks for International Economic Relations

Кузнецова

Larina

2023

International Trade and Trade Policy

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The article systematizes the consequences of the introduction into circulation of the so-called third form of money – retail digital currencies of central banks. Forms of money are evolving under the influence of various factors, and the current period is characterized by the spread of both private digital assets and digital currencies of central banks. Empirical experience has not yet been accumulated, and the article reviews the results of current theoretical research on the possible consequences of the possibility of issuing digital currencies of central banks, presents possible characteristics of this form of money. The further spread of the studied digital currencies depends on their configuration and on the settings of the so-called currency design, the variants of which are presented in the article. The authors analyze the consequences of the introduction of retail digital currencies from the perspective of their possible impact on the transmission mechanism, on the structure of monetary circulation, as well as on the use of the national currency as a global means of payment. It is concluded that the formation of new models of the functioning of monetary systems, taking into account the spread of digital currencies of central banks, will change the existing economic, financial and trade relations both within individual states and in the global space.

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Significant Effect of the Central Bank Digital Currency on the Design of Monetary Policy

Cited by 4 publications

References 15 publications

Monetary Policy Implications of Electronic Money Adoption: Evidence from Nigeria

Monetary Policy Implications of Electronic Money Adoption: Evidence from Nigeria

Digital Rupiah as a Proponent of Financial Inclusion: A Study of Legal Strengthening Aspects

Implications of the Introduction of Retail Digital Currencies by Central Banks for International Economic Relations

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