Bank Digital Research Articles

Consumer Acceptance of Central Bank Digital Currency in a Fully Launched Market

Since 2020 the number of countries and currency unions exploring the implementation of central bank digital currency (CBDC) has increased by approximately 300 percent. The literature shows an abundance of technical feasibility studies and a dearth of research on consumer adoption. This study investigates consumer adoption of CBDC in a market (Jamaica) in which it was already launched. Data was collected from 200 respondents based on a convenience sample. A conceptual model was constructed based on the unified theory of acceptance and use of technology. To validate the model and test the six hypotheses we employed PLS-SEM partial least squares structural equation modeling. Three of the six hypotheses were supported: behavioral intention has a significant positive impact on user behavior, social influence had a significant positive impact on behavioral intention, and facilitating conditions has a significant positive impact on user behavior. Age and gender had no moderating effect. This is the first study done in a market where CBDC was implemented, done on consumers and provided jurisdictional recommendation to create network effects and increase adoption

How Does the Nexus Between Digitalization and Banking Performance Drive Digital Transformation in Central and Eastern European Countries?

The aim of this paper is to create a digitalization index for banking sectors using a set of indicators based on World Bank data for the period of 2010–2021, which will allow us to rank the sectors of Central and Eastern European countries (CEECs). The digitalization index is built based on how ready banks are for digitalization, the potential customers available for digital banking, and the level of digital infrastructure, with each of these aspects representing one pillar. Based on the calculation of the digitalization index, we emphasize that Romania is the leader, followed by Latvia and Lithuania, while Hungary and Estonia are at the opposite pole. Furthermore, we applied the fully modified ordinary least squares (FMOLS) method to measure the impact of digitalization on banking performance. This study reveals that Romania, Latvia, and Lithuania lead in digital banking transformation due to significant investments in infrastructure and customer engagement, while Hungary and Poland lag in terms of digital readiness. The results indicate that digitalization has a significant positive effect on banking performance (ROE), although countries experiencing market saturation had the potential to see a decline post-2018, necessitating further innovation to sustain growth. In the digitalization context, the results are relevant for policymakers, showing that investing more in digitalization is important and that there is a need to help people have greater access to banking services due to a lack of willingness and financial education, factors which prevent them from embracing digital changes. The results show that improving banking digitalization positively influences banking performances. This study provides an innovative and complex index for assessing banking digitalization in Central and Eastern Europe, with valuable implications for policymakers. We highlight the need to align digitalization policies with the specific level of digital development of each country in order to optimize the integration of digital technologies and enhance economic competitiveness.

Quantum Cryptography and Blockchain-Based Social Media Platforms as a Dual Approach to Securing Financial Transactions in CBDCs and Combating Misinformation in U.S. Elections

This paper explores the integration of quantum cryptography and blockchain technology to address two pressing challenges: securing financial transactions in Central Bank Digital Currencies (CBDCs) and combating the spread of misinformation during U.S. elections through decentralized social media platforms. As quantum computing advances, traditional encryption methods may become obsolete, posing significant risks to digital financial systems. Quantum cryptography, with its quantum-resistant algorithms, offers enhanced protection for CBDC transactions, ensuring long-term security and privacy. Simultaneously, blockchain-based social media platforms provide a decentralized structure that can prevent the dissemination of false information by ensuring transparency and authenticity through cryptographic verification and consensus mechanisms. These platforms also facilitate decentralized identity management, empowering users to verify content without relying on centralized authorities. By combining quantum cryptography’s secure framework with blockchain’s decentralized transparency, this dual approach creates a more secure digital ecosystem that not only safeguards financial transactions but also strengthens democratic processes. The paper further addresses the regulatory and technical challenges associated with implementing these technologies and their potential to shape a more secure, transparent, and accountable future.

Antecedents of users’ switching intention to Central Bank Digital Currency: A push-pull-mooring model perspective

Antecedents of users’ switching intention to Central Bank Digital Currency: A push-pull-mooring model perspective

Making Tax Smart: Feasibility of Distributed Ledger Technology for Building Tax Compliance Functionality to Central Bank Digital Currency

The latest advancements in distributed ledger technology (DLT) and payment architectures such as the UK’s New Payments Architecture present opportunities for leveraging the hidden informational value and intelligence within payments. In this paper, we present Smart Money, an infrastructure capability for a central bank digital currency (CBDC) which enables real-time value-added tax split payments, oversight, controlled access, and smart policy implementation. This capability is implemented as a prototype called Making Tax Smart (MTS), which utilises the open-source R3 Corda DLT framework. The results presented herein confirm that it is feasible to build an MTS capability which is scalable and co-exists with the current payment systems. Smart Money CBDC has the potential to mobilise payments data, transforming the role of money from a blunt instrument to a government policy sensor and actuator without disrupting the existing money system. DLT, smart contracts, and programmable money have a crucial role to play with benefits for government departments, the economy, and society as a whole.

Readiness to Use the Digital Euro (CBDC) by Consumers Based on the Example of France and Germany

Theoretical background: Attempts to offer the users of state money its new digital form with characteristics partially similar to cash and cryptocurrencies led to the creation of the Central Bank Digital Currency (CBDC) concept. In October 2020, the European Central Bank (ECB) published a report on the conditions for building the concept of the digital euro. On January 12, 2021, the ECB completed collecting the opinions of potential users (understood as natural persons) and representatives of companies, institutions, and experts on their expectations for the future digital euro. However, the survey only asked a few questions about the preferred features of the digital euro. The questionnaire form was only available on the website of the ECB, which made the respondents a specific group as only those who were interested in visiting the website replied. Representatives of companies, institutions, and experts also provided answers from the user’s point of view. The questions did not take into account the characteristics of the respondents ensuring the representativeness of the research sample. Purpose of the article: The article aims to define the relationship between the characteristics of consumers (individual users of money as a product of the central bank) from France and Germany and their acceptance of using the digital euro. Research methods: The analysis used data from a survey conducted using the CAWI method. The study was conducted in August 2021 on a group of adult internet users representative in terms of gender, age, and place of residence, including 638 German and 646 French respondents (full responses). Main findings: The results show that in both countries the consumers most willing to accept the digital euro are men rather than women, consumers already taking advantage of the opportunities offered by mobile banking, and consumers who believe that the money entrusted to banks is not safe. However, the differences observed in the example of only these two countries support the conclusion of other researchers about the need to conduct this type of research either in the entire eurozone or in selected eurozone countries with specific payment habits.

Digital Rupiah as An Alternative Digital Transaction in Indonesia

Digitalization in the financial industry revolutionized the transaction system with the emergence of Cryptography-based Digital Currencies. It has recently evolved into digital currencies issued by central banks, known as Central Bank Digital Currency (CBDC). Bank Indonesia responds by developing a plan to release Digital Rupiah as part of the digital transformation initiative in the national payment system. This study aims to determine the authors' interest in discussing Indonesia's CBDC as seen through article publication trends. This research uses the systematic literature review (SLR) method. The results show that there is an increasing trend in the publication of articles on Digital Rupiah. The published articles discuss Digital Rupiah from various sides such as legality, implementation mechanism, challenges opportunities and impacts, to its potential implementation.

Enhancing Mobile Central Bank Digital Currency Payment Participation Through Creative Communication on Social Media

With the development of mobile technology, mobile devices have dramatically changed the way people entertain and pay. Social media platforms are booming, and social media is gradually becoming the main form of entertainment for people. Enterprises and organisations with promotional needs are paying more attention to the high efficiency and high input–output ratio of social media communication. Social media advertising has shown more vitality than traditional advertising. Meanwhile, mobile devices have also changed the way people pay, and mobile payment is gradually becoming popular. China has taken the lead in launching mobile Central Bank Digital Currency (CBDC) payment, a new payment technology, and social media communication also plays an important role in promoting CBDC payment. The purpose of this article is to explore the impact of social media creative communication on mobile CBDC payment participation. A research model suitable for this study was created by integrating privacy concern and elaboration likelihood model theory. A valid response from 300 respondents was obtained through an online self-administered questionnaire. Hypotheses were tested through a two-stage research method of partial least squares structural equation modelling with the method of artificial neural network. The results of the study showed that social media advertisements’ creativity and social media information quality significantly and positively influence users’ social media engagement. Users’ social media engagement significantly and positively influences users’ mobile CBDC payment participation. The study provides valuable practical guidance for managers of mobile CBDC payments to promote mobile CBDC payments through social media.

Wholesale Central Banks Digital Currencies and New Opportunities for Interbank Settlements with the Prospect of Entering International Transactions

A new generation of digital technologies that make it possible to speed up settlements and reduce their cost was born from crypto-currency projects, but the prospects of their economically effective and socially responsible application associate with central bank digital currency. The article discusses the issues of digitalization of central bank money in relation to interbank settlements, including for servicing cross-border payment turnover. So far, this topic has not found a significant response in Russian scientific journals. This publication aims to popularize it by summarizing and analyzing examples extracted from foreign experiments. The advantages of digitalization are compared with the capabilities of conventional payment systems. Descriptions and comparisons of the architectures of the new generation payment system are given, in the range of which it is possible to choose compromises between benefits, risks and costs in the search for the optimal solution. In conclusion, the prospects for the transition to an experiment with digitalization of wholesale payments in Russia are assessed following the upcoming introduction of the “retail” digital ruble

Best Before? Expiring Central Bank Digital Currency and Loss Recovery

AbstractPhysical cash enables payments in the absence of electricity or network coverage. Such offline payment functionality promotes the operational resilience and, particularly in developing countries, the accessibility of payments. Central banks are exploring issuing digital cash substitutes with similar offline payment functionality. Such substitutes could incorporate novel features, making them more desirable than physical cash. This paper considers automating personal loss recovery for offline digital currency balances through the introduction of an expiry date. Our results show this functionality could have a substantial positive impact on consumer demand for offline digital currency balances. We find an asymmetric impact on welfare of adjustments to the expiry date: small increases from the optimum cause little damage, but small decreases from the optimal expiry date can have a large negative impact. More information‐sharing between user devices and the central bank can improve loss recovery but has an ambiguous impact on social welfare.

Understanding the rapid development of CBDC in emerging economies

Central Bank Digital Currencies (CBDCs) mark a significant evolution in digital finance. This study examines the factors influencing CBDC adoption, highlighting the roles of regulatory quality and digital financial access. Results indicate that regulatory frameworks, rather than the level of digital infrastructure, predominantly drive CBDC initiatives. The findings caution against the rapid deployment of CBDCs in less prepared environments, which could pose risks to financial stability. The research underscores the importance of comprehensive regulatory strategies over technological readiness for successful CBDC implementation. Developed markets are advised to consider policies that mitigate risks associated with the transition towards digital currencies.

Analysis of the Potential Impact of Central Bank Digital Currency (CBDC) on Banking in Indonesia

Analysis of the Potential Impact of Central Bank Digital Currency (CBDC) on Banking in Indonesia

Implications of Central Bank Digital Currency for Monetary Operations

Implications of Central Bank Digital Currency for Monetary Operations

Positioning Central Bank Digital Currency in the Payments Landscape

Positioning Central Bank Digital Currency in the Payments Landscape

Central Bank Digital Currencies and Financial Stability: Balance Sheet Analysis and Policy Choices

Central Bank Digital Currencies and Financial Stability: Balance Sheet Analysis and Policy Choices

The Effect of Digitalization of Banking Services on Consumer Satisfaction

Digitalization services are a banking innovation in providing fast services that can be accessed anytime and anywhere to consumers. Bank BRI Sisimangaraja is one of the banks developing this digitalization service innovation. Consumer satisfaction is the main factor that must be considered by a service provider company, especially banking, to maintain the company's survival. Therefore, in order to achieve consumer satisfaction, digitalization services are carried out well and correctly. The aim of this research is to find out whether the digitalization of banking services has an effect on bank consumer satisfaction. In accordance with research, there are four elements of measuring banking digitalization services that influence consumer satisfaction, namely speed, accuracy, comfort and security. This research uses quantitative research methods with multiple linear regression analysis. The respondents in this research were 120 people who were active customers of Bank BRI Sisimangaraja. The research results obtained from this research show that speed has a significant effect on consumer satisfaction. The size of the regression coefficient is 0.221, meaning that speed influences consumer satisfaction by 0.221 units. Accuracy has a significant effect on consumer satisfaction. The size of the regression coefficient is 0.267, meaning that accuracy influences consumer satisfaction by 0.267 units. Convenience has a significant effect on consumer satisfaction. The size of the regression coefficient is 0.452, meaning that comfort influences consumer satisfaction by 0.452 units. Security has a significant effect on consumer satisfaction. The size of the regression coefficient is 0.710, meaning that security influences consumer satisfaction by 0.710 units. In this way, speed, accuracy, comfort and security have a significant effect simultaneously (together) on the consumer satisfaction variable. Based on the results of the table analysis, the adjusted R square value is 0.479. This means that the influence of service and product quality contributes a joint influence of 47.9% to the consumer satisfaction variable, while the remaining 52.1% is influenced by other variables.

Lessons from the first implemented Central Bank Digital Currency: The Sand Dollar

La aparición de las monedas digitales de los bancos centrales (CBDC, por sus siglas en inglés) ha suscitado un considerable debate en los círculos de política monetaria, sobre todo a medida que las naciones exploran los posibles beneficios y retos de la implantación de las monedas digitales. Este documento se centra en el dólar de arena de Bahamas, la primera CBDC plenamente operativa del mundo, y ofrece un análisis en profundidad de los factores que impulsaron su desarrollo, la estructura de su implantación y los obstáculos a los que se enfrenta en la actualidad, especialmente en lo que respecta a sus tasas de adopción relativamente bajas entre la población. A través de la óptica del estudio de caso de Sand Dollar, el documento esboza cuatro lecciones cruciales para el éxito de la implantación de futuros CBDC. Entre ellas, la importancia de que la moneda digital resulte atractiva para los usuarios, el establecimiento de objetivos políticos amplios y claros, una fuerte inversión en educación pública para fomentar la comprensión y la confianza, y la adopción de una perspectiva a largo plazo que permita una integración y adopción graduales. Las conclusiones de este estudio ofrecen valiosas orientaciones a otros países que estén considerando la introducción de sus propios CBDC.

For a Political Economy of Central Bank Digital Currency

Cet article propose de considérer la monnaie numérique de banque centrale (MNBC) d’un point de vue d’économie politique. À cet égard, les incitations en jeu suggèrent que la MNBC serait appréciée de certains agents, en particulier les décideurs de politique économique, et peu goûtée par d’autres, spécialement les banques. En outre, des considérations d’économie politique, davantage que d’analyse économique, pourraient jouer un rôle important dans la décision de lancer une MNBC de détail. Enfin, la MNBC de détail pourrait se voir accorder un clair avantage en termes de statut et de frais de transaction. une MNBC de détail programmable ouvrirait des perspectives de surveillance de masse dans les pays non-démocratiques et, d’une point de vue international, la MNBC semblerait bien adaptée à une militarisation. JEL: E42, E58

Unleashing the Central Bank Digital Currency Revolution and its Impact on Exchange Rate: A Monetary Approach Synthesis

Research Originality: The introduction of CBDC by the Central Bank of Indonesia has increased the intensity of news about CBDC. Besides aiming to introduce the future direction of the payment system, the news potentially causes uncertainty and speculation in the market, which may impact the rupiah exchange rate.Research Objectives: This research analyzes the impact of CBDC news on the rupiah exchange rate, synthesizing a sticky price version of the monetary approach to the exchange rate. Research Methods: A CBDC News Index is constructed based on a compilation of news data from major online media between 2018 and 2023. The structural VAR (SVAR) method is thenemployed to investigate the impact of CBDC news on the exchange rate dynamic.Empirical Results: The results suggest a trend consistent with the hypothesis, indicating that news about CBDC may lead to pressure on the domestic currency, resulting in depreciation. However, the impact is not statistically convincing as the coefficient is not statistically different from zero. The monetary approach synthesis findings suggest that raising the policy rate is likely efficacious in counteracting the pressure of domestic currency depreciation. Meanwhile, other monetary approach variables exhibit anomalies related to exchange rate dynamics.Implications: As the central bank plans to implement a Central Bank Digital Currency (CBDC), it must carefully control the dissemination of information about what the CBDC will entail and how it will be rolled out. CBDC blueprint and official disclosure help reduce uncertainty and speculation about implementing CBDC.JEL Classification: D80, E58, F31How to Cite:Kurnia, A. S. & Assidiq, M. A. (2024). Unleashing the Central Bank Digital Currency Revolution and Its Impact on Exchange Rate: A Monetary Approach Synthesis. Etikonomi, 23(2), 271-286. https://doi.org/10.15408/etk.v23i2.37788

CBDCs, regulated stablecoins and tokenized traditional assets under the Basel Committee rules on cryptoassets

Purpose This paper examines the impact of Central Bank Digital Currencies (CBDCs), regulated stablecoins and tokenized traditional assets on the cryptocurrency market, following the guidelines set by the Basel Committee. This study aims to analyze the implications for secure storage, cross-border transfers and necessary investments. Design/methodology/approach The paper uses a policy analysis approach to assess the potential effects of the Basel Committee’s regulations on CBDCs, regulated stablecoins and tokenized traditional assets. It explores their impact on the cryptoasset market, strategies of central and commercial banks, payment systems and risk management. Findings The adoption of CBDCs, regulated stablecoins and tokenized traditional assets is expected to grow rapidly in the coming years. It raises concerns about secure storage, cross-border transfers and required investments. Central banks are likely to introduce CBDCs and authorize stablecoin issuance, aiming for efficient monetary policies and risk management. Basel III regulations may lead to asset tokenization by banks, reducing asset size and increasing fee-based income. Originality/value This paper provides insights into the potential impact of the Basel Committee's regulations on CBDCs, regulated stablecoins and tokenized traditional assets. It contributes to the understanding of the evolving cryptoasset market and the strategies of central and commercial banks in adopting these technologies. The findings offer valuable information for policymakers, regulators and market participants in navigating the changing landscape of digital assets.