Currency Design Research Articles

Enhancing Counterfeit Banknote Analysis: Case Studies Using TOF-SIMS

Counterfeiting banknotes poses a significant threat to economies worldwide, particularly in developing countries where cash transactions remain predominant. Despite advancements in security features, counterfeiters continue to adapt, necessitating more sophisticated analysis methods. Time of flight Secondary Ion Mass Spectrometry (TOF-SIMS) offers a powerful approach to surface chemical imaging and depth profiling of counterfeit currencies. Real cases of five different counterfeit Lebanese banknotes are studied, using TOF-SIMS to address specific questions regarding the composition and placement of replicated security features, gaining insights into counterfeit banknote production and the raw materials used. The findings provide essential information to decision-makers at the national bank, supporting the design of future currencies through the selection of security features best suited to the local market, thereby enhancing protection against financial fraud..

The Optimal Quantity of CBDC in a Bank-Based Economy

We show that the estimated effect of digital euro news on bank stock valuations and lending depends on the bank’s deposit reliance and the central bank digital currency (CBDC) design features. Using a quantitative DSGE model calibrated to the euro area economy that replicates such evidence, we find that CBDC issuance yields nontrivial welfare trade-offs between, on one side, the positive expansion of liquidity services and the improved stabilization of deposit funding and lending and, on the other side, a negative bank disintermediation effect. The optimal amount of CBDC lies between 15 and 45 percent of quarterly GDP. (JEL E23, E42, E58, F33, G14, G21)

Explainability and operational resilience in the design of central bank digital currencies: A new generation of money-laundering deterrence software

It has been argued that technologies such as blockchain could provide financial systems and societies with a better infrastructural solution to process information and identify illegal transactions. Building on this idea, this paper argues that if payment systems are to take advantage of the properties that define distributed ledger technologies, they must build on those models that have delivered improved trust in our economies. Accordingly, the model presented in this paper is based on a universal digital ID that could be interoperable among different jurisdictions. Such a digital ID would rely on an explainable framework structured around an understanding of the role played by central banks, intellectual property rights and personal data protection in the processing of information. Understanding the interaction between these elements may be the first step towards a better understanding of the infrastructures employed to tackle illegal activities, which could in turn contribute to the successful development of the standards on which the next generation of suspicious transaction or order reports will be based.

Research on the extraction of RMB decorative pattern configuration and its innovative design: Analysis based on OpenCV calculator visual library and shape grammars

Relevance. The study addresses the potential application of configuration rules in creating decorative designs for RMB, focusing on improving design aesthetics and functionality. Purpose. To analyze the feasibility of using configuration rules to enhance the design of Chinese currency. Methodology. The study involved the analysis and synthesis of decorative patterns, the establishment of configuration rules, and the examination of their application in currency design. Results. The findings demonstrate that configuration rules can effectively utilize existing patterns to improve Chinese currency design, providing opportunities for new design variations that align with modern aesthetic and functional requirements. The analysis revealed that Chinese currency patterns often embody cultural significance, historical events, and characters through complex geometric and abstract elements. Key features of the patterns were identified, highlighting the potential for more efficient use of configuration rules in design. Conclusions. Configuration rules can successfully organize and enhance the decorative patterns in the Chinese currency. The study confirms the feasibility of applying these rules to create cohesive and culturally rich designs. Additionally, the integration of configuration rules can streamline the design process and ensure consistency in aesthetic quality. Keywords: computer technology; image processing; syntactic structure extraction; monetary unit

Development of central bank digital currencies: a bibliometric analysis

PurposeWe aim to conduct a bibliometric analysis that explores and maps quantitative data of the emerging field of central bank digital currencies in science and its implications in practice. We seek to clarify the underlying research structures and streams of the new phenomena, and our motivation is the rising number of pilots between governments seeking to implement different types of central bank digital currency.Design/methodology/approachWe designed the unique set of keywords to explore ongoing projects on central bank digital currencies and the evolution of scientific thought on the topic. We conducted a descriptive analysis and an evaluating bibliometric analysis on the timeline from 2018 to April 18, 2023 and investigated 76 articles in the Web of Science database and 152 articles in the Scopus database using VOSviewer.FindingsWe highlight three main directions of discourse on central bank digital currencies in economics using authors keyword analysis, that are: (1) cash, (2) monetary policy and (3) financial stability. We conducted a map-based text analysis of the abstracts and identified the following main streams of discussion in the field: (1) policy-related research on financial systems, (2) a comprehensive review of the design and features of central bank digital currencies and (3) research on the impact of central bank digital currencies on the banking system.Originality/valueThe unique set of keywords allows us to continue the discourse on central bank digital currencies including implications of ongoing governmental projects on the topic and provide directions for future research. We brought the focus on the impact of central bank digital currencies on the banking sector and the new possible order for cash, deposits and payments.

A literature review on the design and implementation of central bank digital currencies

Within the last five years, research on Central Bank Digital Currencies (CBDCs) has increased with increased momentum. Particular events, such as the growth of private digital currencies, Facebook’s attempt to release a stablecoin, the long-term development of Chinese CBDC, and Covid-19, are the leading causes for this growing significant interest. Most recently, the interest converged in more specific design and implementation directions. Many scholars show particular interest in account-based retail CBDCs with interest-bearing capabilities. In contrast, few others urge caution by favoring a wholesale model that is representative of the setting of the current financial system. Unsurprisingly, the primary source of such literature stems from global financial institutions and their close central banking networks. Academia and research institutions have recently increased their focus on the potential economic and social impacts of such purported design choices. As specific design principles for CBDCs have started to take shape, the policy objectives of implementing different CBDC designs are studied from the perspective of benefits and risks. These trade-offs are either generic or related to macroeconomic and financial stability implications. Evidence exists that purported generic benefits can often be achieved without CBDCs, while the purported monetary and fiscal policy benefits rely on theoretical results that lack real-world data. Some of the risks could be amplified depending on CBDC design choices. Theoretical and alternative literature is reviewed along with the evidence from use-case applications to spot the possible shortcomings in the current stage of the design and implementation literature of CBDCs. The scope is limited to the impact on economic policies and the relevant potential socioeconomic impact. The results show that further research and debate are needed from a multidisciplinary perspective.

Optimal Design of Central Bank Digital Currency

Optimal Design of Central Bank Digital Currency

Retail Central Bank Digital Currency Design Choices: Guide for Policymakers

Retail Central Bank Digital Currency Design Choices: Guide for Policymakers

Optimal CBDC design for Ukraine through the lens of privacy and security

The growing popularity of cryptocurrencies has put on the agenda the need to develop an alternative and more regulated digital currency design, including a central bank digital currency (CBDC). The objective of the study is to formulate proposals for the development of the optimal design of the CBDC of Ukraine. The study is based on a review of the literature on digital currencies, cryptocurrencies and legislation on personal data protection, payment security and financial supervision. The implementation of the CBDC in Ukraine is associated with numerous technical and legal risks, including: privacy and data security risks; complications of financial monitoring; contradictions with national and international legislation; banks disintermediation risks. To prevent these risks, a CBDC design is proposed that is compatible with national and international legislation, ensures data privacy and security, facilitates financial tracking, and reduces the risks of disintermediation. The development of the CBDC in Ukraine could have a significant impact on the country's financial system. However, it is essential that the design of the CBDC is carefully considered to mitigate potential risks.

Lessons from crypto assets for the design of energy efficient digital currencies

This paper considers the energy profile of the main components and technological options of digital currencies, including crypto assets. Digital currencies differ widely in energy consumption depending on how they are designed. We draw on academic, institutional, and industry estimates of the energy use resulting from the processing and settlement of payments to compare digital currencies to each other and to existing payment systems. Results show that, depending on their designs, digital currencies have the potential to aid in reducing energy consumption compared to the current payment system. Energy efficient designs limit payment system actors and redundancies. For distributed ledger technologies (DLT), the key factors affecting energy consumption are the ability to control participation and the consensus algorithm. Estimates for prospective non-DLT digital currencies match the lowest energy consumption of the DLT-based designs. We discuss the relation between these findings and the energy profile of potential Central Bank Digital Currencies (CBDC) that are under consideration.

Money laundering and the privacy design of central bank digital currency

This paper studies the implications of money laundering for the optimal design of central bank digital currency (CBDC). I build a general equilibrium framework to explicitly allow money laundering by agents and income audits by a government. I find that as long as CBDC offers less anonymity than cash, introducing CBDC will decrease money laundering. However, if CBDC still offers a relatively high level of anonymity but a low interest rate, then introducing CBDC will decrease the output from not only agents who launder money but also agents who do not. If CBDC instead offers low anonymity and a high interest rate, then introducing CBDC can increase aggregate welfare without lowering output. Furthermore, introducing CBDC needs not increase the funding costs of banks or decrease bank lending.

IMPLICATIONS OF THE INTRODUCTION OF RETAIL DIGITAL CURRENCIES BY CENTRAL BANKS FOR INTERNATIONAL ECONOMIC RELATIONS

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.

Design and classification of tradable mobility credit schemes

The ongoing research on tradable credit schemes (TCS) in mobility has captured the attention of policymakers, authorities and academics. Even though several studies have demonstrated the potential of such schemes, key policy design aspects that are relevant for real world implementation have been overlooked. There exists insofar no blueprint for an actual application of a TCS. We therefore propose a single all-encompassing framework for designing a TCS based on three dimensions: ownership, transfer and consumption. This framework has been developed through the extraction of policy design questions in the existing literature on TCS as well as alternative demand management schemes. Literature on the design of central bank digital currencies (CBDC) and digital tokens has been used to derive additional decisions regarding technical implementation and regulation. The decisions that are incorporated in the framework facilitate the comparison of different scheme designs in a three-dimensional space, addressing aspects of security, anonymity, centralization and technical feasibility. Hence, it provides policymakers and responsible authorities with a comprehensive framework on the essential decisions that need to be made upon practical application of a tradable credit scheme. It also serves as a means to classify existing work and develop new (or more realistic) variants of TCS that can be studied in future research endeavors. Based on the proposed framework, we devise an extensive research agenda describing directions for future research on tradable credit schemes across a variety of themes.

Adoption of digital currencies of central banks: International practices

Subject. This article analyzes the possible design of the central bank digital currency (CBDC) and identifies its main characteristics. Objectives. The article aims to identify the most promising models of the central bank digital currency, and assess the risks of CBDC implementation. Methods. For the study, we used general scientific research methods through logical and comparative analyses. Results. The article analyzes the background and rationales that prompted central banks to intensify research in this area. Based on a comparative analysis of the practice of adopting the central bank digital currencies in a number of countries, the article describes the models of their circulation and identifies the main trends and risks. Conclusions. The introduction of the CBDC will have a profound impact on the operational procedure and instruments of monetary regulation of the economy, on the conditions and procedure for conducting operations with banks in the framework of achieving the objectives of monetary policy. The introduction and use of the CBDC will cause significant changes in the role and position of the main financial intermediaries in the models of interaction in financial markets and financial infrastructure.

Cambios en los objetivos y en los instrumentos de la política económica en contextos de crisis e incertidumbre: especial énfasis en el impacto de las criptomonedas sobre la estabilidad monetaria y financiera

The goals and instruments of economic policy have undergone changes over time, especially in periods of crisis. The global financial crisis that began in 2008 revealed the importance of financial stability as an objective of economic policy and of macroprudential policy as a key instrument to achieve it. The new digital era initiated with cryptocurrencies and with their underlying technology has important consequences for both financial stability and monetary policy, which is why a regulatory response by the economic and monetary authorities is essential, both in terms of the regulation of crypto-asset markets as well as the design of central bank digital currencies.

Money Laundering and the Privacy Design of Central Bank Digital Currency

Money Laundering and the Privacy Design of Central Bank Digital Currency

A Comparative Study of the Design Frameworks of the Ghanaian and Nigerian Central Banks’ Digital Currencies (CBDC)

This paper discusses critical considerations in the design of central bank digital currency (CBDC) in West Africa through a comparative case study of Ghana’s (eCedi) and Nigeria’s (eNaira) design frameworks. This paper analyses CBDC design options framed through context (digital payment landscape and CBDC objectives), technical aspects (design principles, architecture, risks), use cases, and deployment plans. This study conducted a thematic analysis of official CBDC design documents to identify similarities, differences, and patterns. The results indicate more similarities between the eCedi and eNaira designs than differences. Differences were observed in the CBDC deployment context, risk profiles, and plans. Surprisingly, neither country has articulated the detailed legal and regulatory environments for CBDC. This paper highlights the use of CBDC designs to promote citizens’ welfare by using financially inclusive policy goals within central banking’s welfare functions, thereby extending their traditional role. Policymakers should focus on adaptive legal and policy design outlooks to address uncertainties associated with CBDC. This paper is important because it is one of the first to contribute to a detailed comparison of Ghana and Nigeria’s CBDC design frameworks.

Internet of Things Background: An Empirical Study on the Payment Intention of Central Bank Digital Currency Design

This article proposes and verifies the consumer acceptance intention model under the background of central bank digital currency payment. It modifies the theory of technology acceptance (TAM), rational action theory (TRA), and extended valence framework (EVF) through the construction of perceived privacy, perceived security, perceived system quality, and perceived benefits. The data collected from 325 questionnaires on consumers’ attitudes toward the central bank’s digital currency were used to apply the structural equation model to evaluate the prediction model. The empirical results indicate that perceived privacy, perceived security, and perceived system quality are important predictors of perceived trust, and perceived trust is an important predictor of perceived interest and intention. Perceived privacy, perceived security, and perceived system quality are key factors influencing consumers’ intentions.

Tokenization, blockchain and web 3.0 technologies as research objects in innovation management

Tokenization, blockchain and web 3.0 technologies as research objects in innovation management

МЕТОДОЛОГІЧНІ ЗАСАДИ РЕГУЛЮВАННЯ ВИПУСКУ ТА ОБІГУ ЦИФРОВИХ ГРОШЕЙ ЦЕНТРАЛЬНИХ БАНКІВ

The article provides a comprehensive analysis of the methodological and practical aspects of regulating the processes of designing, issuing, using and circulating digital currencies of central banks. It has been proven that the process of digitalization of money is a fundamentally new objective stage in the organization of the functioning of national monetary and financial systems and the activities of central banks. Peculiarities and problems related to the regulation of the cryptocurrency market have been identified. The advantages and disadvantages of the principles and key characteristics of the design, issuance, use and circulation of digital currencies of central banks proposed by international financial organizations and central banks of individual countries of the world are characterized. It was determined that the process of regulating the issuance and circulation of digital currencies by central banks is still in its infancy and is characterized by a wide range of approaches to the implementation of regulatory activities and performance of control functions. Taking into account the global nature of digitalization of money and financial markets, the main directions of international coordination of central banks' activities in the field of introduction of uniform technical, technological, environmental and organizational approaches and standards to design, release, ensuring information confidentiality, support of financial inclusion, security and competition in the payment market have been determined in the process of using digital money with the aim of forming a political and regulatory environment agreed with all interested parties for their acceptance by society, as well as ensuring reliable mechanisms of regulation and control over the issue, use and circulation in the interests of the state and citizens. The main principles of the organization of regulation of the issue and circulation of digital currencies are characterized, the directions of improvement of the organization of interstate and national regulation of the circulation of digital currencies of central banks are substantiated with the aim of increasing the efficiency of calculations in the national economy and making cross-border payments, as well as ensuring a high level of monetary sovereignty of the country.