National Monetary System Research Articles

A Hierarchical-Dealer-Centric Model of FX Swap Valuation

This paper constructs a model of foreign exchange (FX) swap valuation based on dealers’ behavior and the hierarchy of the global dollar funding system. International investors use these currency derivatives to synthetically fill their US-dollar funding gaps. In this model, three attributes of market structure drive the valuation of FX swaps: market-making costs (measured by dealers’ bid-ask spreads), dollar funding liquidity risk (measured by CIP deviation and market imperfections), and FX swap market liquidity (measured by dealer competition). The goal is to understand how market design influences the cost of US dollar funding and its spillover effects. FX dealers are vital institutions in this ecosystem, as their balance sheets connect national monetary systems to the global dollar funding markets. For currencies with low FX turnover, central banks act as market makers, while private banks serve as dealers for currencies with the highest FX turnover. Studying the “dollar funding gap” through the lens of FX swap dealers is a crucial aspect often overlooked in international finance scholarship.

Issues of trust in money and the monetary system

Subject. The article deals with two main confidence issues, i.e. economic agents’ choosing the bearer of the institution of money and assessment of confidence in the monetary unit. Objectives. The purpose is to perform a comprehensive study of the main problems of trust in money in economic relations, to assess the elements of trust that lie in the way of economic agents' choice of forms of money, and to characterize our approach to the assessment of trust. Methods. The study rests on the methodology of the new institutional economic theory, using methods of comparative, logical, and statistical analysis. Results. We revealed a five-level hierarchical structure of trust in money that demonstrates the formation of trust in the monetary unit through the trust in the State, that is, the arrangement of the national monetary system and the reputation of monetary organizations, as well as through the trust in the functions they perform. We unveiled indicators of trust that are under the influence of endogenous and exogenous political, institutional, economic, functional, and socio-psychological factors, and that are subject to quantitative assessment. Conclusions. Trust in the institution of money is characterized by dependence on the designated endogenous and exogenous factors, which include the identified indicators of trust assessment, and which influence an individual's choice of a certain form of money. According to our own approach, it is advisable to evaluate trust in terms of its presence or absence, which, in turn, can be determined through the presence of a doubt factor in respondents.

Prospects for digital transformation of the monetary systems

The active digitalization of financial markets generates new types of digital financial assets, and also raises questions about prospects of the national monetary systems development, taking into account the emerging digital financial instruments. The authors present the results of a study conducted via interviewing respondents about their attitude to cryptocurrencies, about the likelihood of cashless economies, and about the impact of economy digitalization on changing people’s lives. Current scientific studies show that a significant part of authors is inclined to believe that current digitalization trends will lead to the complete disappearance of cash, including cryptocurrencies will play an important role in this process. Low financial literacy, possible failures in electronic payment systems, the difficulty of adaptation for certain groups of the population are the reasons that delay the transition to cashless economies. However, a significant number of advantages that digital assets provide for the development of the economy, and the positive attitude of society to the changes taking place in the process of digital transformation, contribute to a further change in the monetary system.

The Concept, System, and Types of Currency Crimes

The national monetary system is an essential component of the state because of its close relationship and interdependence with the national security and socioeconomic development of the Russian Federation. With the increase of dispositive principles and the complication of public relations, this security and development are constantly changing, influenced by the growing number of their agents, the formation of new specializations, the formation of technologically mediated clusters of interaction between them, the introduction of digital financial instruments, etc. On the one hand, for strategic purposes the grounds for ensuring the national security of the Russian Federation not enough attention is paid to protecting the national monetary system from criminal operations. On the other hand, in their interrelation, protection from external and internal threats, preserving macroeconomic stability, ensuring the stability of the ruble, reducing the withdrawal of assets abroad, and countering illegal financial transactions cannot be achieved without paying due attention to the conceptual foundations of criminal law protection of the national monetary system. In order to implement regulations of a strategic nature and counter these threats, the legislation of the Russian Federation provides for a system of legal norms about currency crimes, whose concepts, systems, and types are analyzed in this article.

Аналіз тенденцій розвитку грошово-кредитної системи України

The successful functioning of the national monetary system determines the efficiency of the country’s money circulation, the effectiveness of monetary regulation measures taken by the country’s central bank, and the ability to meet the needs of consumers for various financial services, as well as the effectiveness of measures to rebuild our economy in the post-war period and the ability to function normally under martial law. The purpose of the article is to analyze the trends in the development of the monetary system of Ukraine, to identify the stages of its formation along with the main problems in the current period. The publication examines the formation and stages of development of the monetary system in Ukraine, namely, identifying the following key stages: since 1991 – the beginning of the institutional formation of the monetary system; since 1996 – introduction of the national currency; since 1999 – overcoming the global financial crisis of 1998 and further development of the national monetary system; since 2009 – overcoming the consequences of the global financial crisis of 2008; since 2015 – overcoming the consequences of the russian-Ukrainian war of 2014; since 2020 – overcoming the consequences of the global financial crisis of 2019, accelerated by the coronavirus pandemic; since 2022 – stabilization and overcoming the consequences of the active phase of russia’s aggression against Ukraine. Some key indicators characterizing the country’s monetary system are analyzed, namely: the dynamics of the country’s monetary base, changes in the discount rate, annual growth in the consumer price index, dynamics of the number of operating banks and their assets, dynamics and structure of loans granted by banking institutions, changes in the return on assets and capital of banking institutions. The main risks and causes of their occurrence in the monetary system of Ukraine during the wartime are analyzed. The main current problems of the monetary system of Ukraine in the wartime period are identified, and some directions for overcoming them are proposed. It is proposed that in order to sanitize the banking sector, it is necessary to withdraw insolvent banks from the market; to ensure inflationary stability, it is necessary to ensure a return to the implementation of inflation targeting policy; to restore the economy, in particular the real sector, it is necessary to ease the requirements for regulating loaning activity, to introduce instruments for targeted stimulation of loaning activity of banking institutions.

Cryptocurrencies vs Central Banks' Digital Currencies: The Role of Financial Literacy

A bifurcation point has arisen in the transformation of the global monetary and financial system, associated with its further digital transformation: will it be based on private digital currencies like Bitcoin, or on the basis of central bank digital currencies (CBDC)? To a large extent, this depends on the willingness of economic agents to use virtual currencies.The purpose of the study is to explore the factors determining the attitude of economic agents to digital currencies and the impact of financial literacy on using these instruments as an investment object and means of payment.The authors use the following research methods: content analysis, retrospective analysis, methods of comparative cross-country analysis, and empirical research in the form of an online survey of graduate financial students. This study is one of the first to reveal differences in the assessment of their knowledge and readiness to use digital currencies of financial and non-financial students, as well as to confirm an adequate assessment of the risks and opportunities of different types of virtual currencies if students have financial knowledge. The research shows that the situation with the decisionmaking of economic agents on the use of cryptocurrencies and the CBDC differs: in the first case, the initiative comes from the economic agents themselves, who make decisions at their own peril and risk; in the second case, economic agents are confronted with the fact of the existence of the CBDC and the need to use them.The authors conclude that the population’s low financial and digital literacy can create a mental barrier to the use of CBDC, complicating their implementation in national monetary systems. The lack of financial literacy leads to an exaggeration of their knowledge by participants in the cryptocurrency market.

A New Dimension in the World Economy - Fiat Digital Currencies: A Review

In an international economic situation in a hyperinflationary environment, the competition for international digital currencies is becoming increasingly intense. The Federal Reserve released its first study on the US central bank's digital currency in early 2022 and China's digital RMB pilot has expanded to 23 regions in 15 provinces and cities... In today's highly digitalized world, the development of a legal digital currency will have a profound impact on national monetary systems, the development of international standards for central bank digital currencies and even the global monetary landscape and is worthy of focused attention and in-depth study. This paper summarizes the development and application of legal digital currency and its limitations at the present stage by combing and analyzing the legal digital currency research literature from CNKI, with a view to providing reference for legal digital currency to better support the innovative development of digital economy, finding a new direction for better development of digital currency and providing a prospect for the internationalization of legal digital currency.

Development of health tourism in Ukraine

The article examines the problems and prospects of the development of medical tourism. An analysis of the development and assessment of the current state of the health care complex in Ukraine was given. The article emphasizes that resort recreation should become a priority area for the future development of tourism in the state, as it can already provide significant foreign exchange earnings, contribute to the strengthening of the national monetary system and create additional jobs in this area. Centers of health tourism are sanatoriums and resorts of various medical profiles. The peculiarity of the tourist product in health tourism is its seasonal nature, the predominance of intra-regional trips and the specific age composition of consumers.

Den'gi i rezhimy denezhnogo obrashcheniya: istoricheskij aspekt

The article deals with the historical aspects of the evolution of the world monetary system (WMS) and the results of monetary and financial problems of Russia’s development. The separation of world currencies from the equivalent commodity that materially provides these currencies, which occurred in the second half of the 20th century, has become a source of new threats to both national monetary systems and the stability of the IAM as a whole. The emergence of electronic money at the end of the 20th century, giving rise to a new stage in the development of the WMS, does not solve these problems. Monetary relations in the world economy will continue to change in the future, passing through various stages of its development, including new global financial crises.

Digital currencies of central banks: Special features and possibilities of use

Subject. The article addresses opportunities and potential of using digital currencies of central banks. Objectives. The aim is to study the current position of digital currencies of central banks in the monetary system, define the economic significance, special features, and areas of possible use, highlight the main advantages and disadvantages of introducing a new form of money. Methods. The study employs general scientific methods, like abstraction, induction and deduction, synthesis, comparative analysis. Results. We disclose prerequisites, economic importance, special features and areas of possible use of digital currencies of central banks (CBDC) in the modern monetary system. We also provide a definition of such currencies as an electronic code accumulated in bank accounts and capable of being sent via communication systems during settlements. The paper reveals the specificity of CBDC as a new form of money, determines the consequences of using CBDC for the world and national monetary systems functioning. Conclusions. The use of the new form of money creates many more problems than it solves. There is no reason to consider the transition to CBDC an inevitable direction in the evolution of the monetary system.

Становлення національної валюти – тридцять років по тому

Introduction. The article deals with the establishment of the National Monetary System of the independent Ukraine, which was marked by the emergence of the first national currency - the Ukrainian karbovanetz. The very appearance of the Ukrainian karbovanetz ensured the possibility of further development of the Monetary System of Ukraine. Problem Statement. Creating our own national currency was neither an non-alternative nor an easy process, as there were a number of problems - both in the domestic economy and in international relations - that had to be solved first. Purpose. The goal is to cover the retrospective of the establishment of the National Monetary Unit, highlighting the main principles of its creation, which continue to influence the state of the modern Monetary System of Ukraine. Methods. The generally known and narrow-professional statistical and factual materials, as well as his own memories and impressions of the author, who was a direct participant in this process, were used. These materials are processed using methods of scientific analysis and comparison. Results. The article examines specific facts that characterize process of the national currency creation, as well as the views of politicians and economists who determined its course and dynamics. The author gives his own assessments of past events and tries to analyze their impact on the modern Monetary System of Ukraine. Conclusions. The first, radical monetary reform in modern Ukraine was carried out in the process of introducing its own monetary unit into circulation - the karbovanetz (1991-1992). Unfortunately, when it was carried out, contrary to the position of the author and his associates, an “inflationary spiral” was unleashed with the intention of transferring all economic troubles caused by hyperinflation to the karbovanetz so that the next national currency, the hryvnia, would be based on a “new, healthy” basis. As it was clear from the theoretical point of view, this approach was wrong and only led to the inheritance of the processes of inflation and devaluation (albeit at a lower rate).

Теоретичні засади та практичні аспекти впровадження і використання цифрових грошей

The study is devoted to the analysis of the practice of using certain types of digital money and substantiation of the theoretical foundations of the mechanisms of use of digital money of central banks. It is determined that the process of digitization of money, which is based on the use of new algorithms, data channels, information sources, evaluation and decision criteria, is a new stage in the development of banking and payment systems, central banks, national monetary systems and, in general, the entire monetary and financial system of the world. The shortcomings of the use of cryptocurrencies, the peculiarities of the functioning of unregulated digital markets that arise from their use are described, and the risks that cryptocurrencies may pose to national monetary and financial systems are identified. Calculations were made and a close correlation was found between the value of the NASDAQ 100 stock index and the price of bitcoin. Based on the analysis of the essence of digital money of central banks, organizational and technical approaches to their design, production and use, the objectivity of the process of their introduction is proved, the advantages and disadvantages of the new form of money are described, the mechanisms of transition from private to digital money is proposed. The main problems that hinder the process of introduction of digital money by central banks are identified and characterized. It has been proved that the introduction of digital money by central banks is the basis of the country's monetary sovereignty and an important tool for implementing economic and social policy. It is substantiated that the use of digital money of central banks will contribute to the transformation of fiscal and tax policy implementation mechanisms, financial monitoring system, monetary transmission channels, significant changes in the structure and functions of commercial and central banks, and strengthen the role of fintech companies in payment systems and financial markets.

Dependent monetary regimes in the Balkans

In this article, we look at the main stages of the monetary systems in the Balkans, representing a cyclical alternation of dependent models, each of them effectively serving the relationship of the Balkan peripheral economies with their dominant military, geopolitical and economic centre. This centre of attraction is the anchor against which the monetary regime of the periphery is adjusted. We consider four periods: (i) the building of a national monetary system after long years of Ottoman domination, and especially the accession to the Latin Monetary Union, (ii) the adoption of the rules of the League of Nations and monetary stabilizations based on the gold exchange standard, (iii) the inclusion in the German Lebensraum and the system of currency control and clearings, and finally (iv) the Soviet zone and the COMECON, the mechanism of passive money and the transferable ruble. In the last period we present the Yugoslav monetary regime, which was attached to the West.

APPLYING MONETARY REGULATION TO CURRENT TRENDS IN SMALL OPEN ECONOMIES

Significant changes in approaches to the monetary regulation of economic stabilization and growth are currently being completed. The processes of change that began under the influence of the global financial crisis have now become inevitable. Determining the main directions of these changes and the possible consequences for small open economies is one of the most important tasks of scientific research. Timely adaptation of national monetary systems in the initial stages of transformation can enable countries to overcome the consequences of the pandemic and make up for lost time. The article analyzes a number of the most characteristic changes in practice and theoretical views on monetary policy. Among them is the change in views on the role and purpose of inflation targeting under the influence of many years of massive emission practices. The identified synchronism of inflation for developed and developing countries gives reason to expect attempts at quantitative easing on the part of developing countries. While they may be postponed due to the acceleration of producer price growth. The tendency to revise the fiscal component in the dualism of fiscal policy to strengthen the targeting of emission is substantiated. The low efficiency of measures of monetary easing and stimulation through the credit channel is noted. The limited impact on the growth of aggregate demand with an increase in the debt burden should lead to a revision of the existing practice of emission and reduction of interest rates. One of the important drivers of changes in monetary regulation is the process of digitalization. Despite certain risks of deficiencies in the effectiveness of central bank monetary policy, the spread of shadow banking, digital currencies and direct lending operations, digitalization is creating new opportunities for financial control and audit. On the basis of the analyzed trends, a conclusion was made about the current tasks of modernization of monetary policy in countries with small open economies, including Ukraine.

Sovereign digital currency system with decentralized infrastructure

In this paper, we consider the concept of a 1-tier national monetary system based on a digital sovereign currency issued by a central bank. In contrast to the approach, based on a centralized technical infrastructure, used in most, if not all, CBDC projects, we suggest to use a decentralized infrastructure. Such an infrastructure can be thought of as a peer-to-peer network consisting of nodes, which are equipotent participants and are equally privileged, each providing a complete set of services required to maintain digital wallets and process transactions with digital currency. Also, unlike most of CBDC projects, two possible formats of digital titles of property are considered: digital accounts with continuously modifiable amount and token-like digital coins with a fixed non-modifiable amount. The suggested model of currency system involves built-in payment mechanisms enabling one to carry out, both online and offline, transfers of digital currency with immediate finality and irrevocability. In this paper, we present an overview of the suggested model of currency system.

АЛЬТЕРНАТИВНІ КОНЦЕПЦІЇ ПОБУДОВИ ГРОШОВОЇ СИСТЕМИ У ПРАЦЯХ УЧЕНИХ-ЕКОНОМІСТІВ ХХ СТОЛIТТЯ

Після демонетизації золота у державах із ринковою економікою в основі функціонування грошової системи лежать кредитний характер емісії грошей і монополія на неї в центральних банках. Проте упродовж ХХ століття продовжували з’являлися альтернативні концепції побудови та функціонування грошової системи, автори яких висували свої пропозиції щодо оптимального облаштування грошового господарства у державі. Виокремлення основних напрямів, якими, на думку вчених-економістів, повинно здійснюватися реформування грошової сфери, — мета статті.
 Серед найвідоміших економічних шкіл найбільше уваги критиці чинного порядку та необхідності перебудови грошової системи присвятили неокласики. І. Фішер, Л. фон Мізес, М. Ротбард, Ф. фон Гаєк, Х. Уерта де Сото не тільки викривали негативні наслідки інфляції, послідовно доводили злочинний характер фідуціарної емісії, виявляли нелогічність існування банківської системи з частковим резервуванням, а й формулювали власні правила облаштування національних і міжнародних грошових систем. В основу їхніх проєктів покладено золоте забезпечення грошей, організація їхнього випуску на ринкових засадах аж до передання емісії у приватні руки та ліквідації центрального банку. У сучасних умовах це відобразилось у появі криптовалют із приватними емітентами, проте без матеріального забезпечення.
 Представник кейнсіанства Р. Гаррод пропонував замінити золотий стандарт на товарний. Прихильники теорії вільних грошей (С. Гезель і М. Кеннеді) ініціювали введення плати за володіння грошима, що повинно спонукати якнайшвидше їх витратити на придбання товарів чи кредитування. Вітчизяняний учений М. Тимофіїв, що творив на еміграції, розробив проєкт випуску грошових сертифікатів, забезпечених зерном, що зберігається на складах їхніх емітентів, — хліборобських банків, і переконував, що це ті гроші, які ніколи не втратять своєї вартості.
 Таким чином, найбільш популярними альтернативними сучасним концепціями побудови грошової системи є повернення до золотого або будь-якого іншого товарного забезпечення грошової одиниці та можливість емісії приватних грошей.

О Концепции национальных электронных денег в Республике Казахстан

The article describes the authors' vision of what conceptual approaches can be for the introduction of national electronic money and reforming the national monetary system in Kazakhstan, the concept of electronic money in the Republic of Kazakhstan is considered. The legal nature of money is investigated, the concept of money as objects of civil rights is given and attention is drawn to the infrastructure of monetary circulation. The analysis of the activities of the National Bank of Kazakhstan on the creation of the creation of the national payment system of Kazakhstan is given.

From cash to private and public digital currencies. The risk of financial instability and “modern monetary Middle ages”

The article analyzes the unstable equilibrium between further developing national monetary systems by means of (private/public) digital currencies while maintaining financial stability as secured by “tangible” store of values like notes/coins. Which are those elements of innovation improving today’s payments system? And, at the same time, which modern trends might destabilize the above-mentioned equilibrium? The paper will identify fundamental monetary principles to be respected, no matter what the innovation level in post-modern economies might soon look like. Cryptocurrencies will be also compared to central bank digital currencies (CBDC), which might soon complement or even replace notes and coins. But, is cash truly a “barbarous relic”? And, which impact might have its legal limitation (as occurring in several European countries)?

Organic global cryptocurrency: towards a stable international monetary system that is closer to Maqāṣid Sharīʿah

PurposeThe most prominent and persistent problems of our global monetary system are instability and imbalances. We propose an international monetary model to solve these problems while at the same time move the model closer to Maqāṣid Sharīʿah (objectives of Sharīʿah). We name this an organic global monetary model or abbreviated as OGM. OGM is an international monetary model directly built on the national monetary system of each member country so that the two can co-exist.Design/methodology/approachModel design, theory and literature.FindingsThe model can eliminate interest rates at the central bank level, create non-tradable international money, and make a more stable international monetary system.Originality/valueOriginal.

Методи реформування глобальної валютно-регуляторної системи: інноваційні сценарії

The article is aimed at formulating the most possible prospective scenarios for reforming the global currency and regulatory system. The first scenario is a supra-nationally oriented currency system, which provides for the introduction of non-cash supranational monetary units in the status of the main international reserve means – instead of the U.S. dollar, with a purpose to counteract its chronic depredation. The second scenario of reforming the global currency and regulatory system is its orientation toward the official remonetization of gold, which provides for the restoration of the gold’s monetary status (in a certain modified form) as a universal and natural value benchmark, as well as its transformation into a first-class asset such as cash or government bonds. The third scenario of reforming the global currency and regulatory system is connected with the development of a multipolar currency system. Its material core is the consolidation of national monetary systems in terms of the formation of international currency unions and collective currencies. And finally, the fourth scenario of reforming the global currency and regulatory system is the digitalized currency system. It provides a mandatory component of the introduction of digital currencies – the cryptocurrencies characterized by presence of the computer nodes controlled by blockchain and evenly distributed at the inter-country level. These elements will be used in those elements of currency systems, where it will be possible to achieve savings in the transaction costs of economic agents for settlement transactions and ensure high reliability of the carried out transactions.