The impact of digital currencies on global financial systems and economic policy.

Introduction

Digital currencies, including central bank digital currencies (CBDCs) and cryptocurrencies, are transforming global financial systems and economic policies. This synthesis explores the impact of digital currencies on financial stability, monetary policy, and economic growth, drawing insights from multiple research papers.

Key Insights

Economic Growth and Financial Stability
- Digital currencies can enhance economic growth and reduce systemic financial risks by lowering leverage ratios and promoting financial stability .
- The substitution effect of digital currencies on bank deposits is limited, suggesting a minimal disruption to traditional banking systems .
Monetary Policy and Transmission Mechanism
- Digital currencies are unlikely to replace fiat currencies, thus presenting minimal risks to traditional monetary policy frameworks .
- The issuance and circulation of digital currencies by central banks can significantly alter the structure and functions of commercial and central banks, impacting the monetary transmission mechanism and fiscal policy .
Global Financial Systems and Cross-Border Transactions
- CBDCs can improve the efficiency of cross-border transactions and international trade, enhancing global monetary policy coordination .
- The development of digital currencies necessitates robust regulatory and security standards to ensure privacy and integrity while adhering to international norms.
Impact on Internet Finance and Traditional Banking
- The gradual popularization of digital currencies can reduce transaction costs, promote currency circulation, and foster the development of Internet finance.
- Digital currencies may lead to higher interest rates, encouraging investment in the Internet financial market and promoting economic development.
Challenges and Regulatory Considerations
- The emergence of digital currencies poses regulatory challenges, particularly in developing countries, where regulatory gaps and risks related to e-money and stablecoins need to be addressed.
- The potential for digital currencies to disrupt traditional banking and financial systems requires careful consideration of governance innovations and regulatory frameworks .

Conclusion

Digital currencies, particularly CBDCs, have the potential to enhance economic growth, improve financial stability, and transform monetary policy frameworks. While they present minimal risks to traditional monetary systems, their impact on cross-border transactions and Internet finance is significant. However, the successful integration of digital currencies into global financial systems requires robust regulatory standards and careful management of associated risks.

The impact of digital currencies on global financial systems and economic policy.

Summary

Introduction

Key Insights

Conclusion

Sources and full results

A study of the economic impact of central bank digital currency under global competition

China's central bank digital currency (CBDC) can enhance economic growth by 0.15% and reduce systemic financial risk, suggesting China should accelerate research and development.

Financial stability and monetary policy issues associated with digital currencies

Digital currencies pose minimal monetary policy risks due to low leverage and their unlikely replacement of fiat paper currencies.

THE IMPACT OF DIGITAL CURRENCY ON THE TRANSFORMATION OF MONETARY POLICY

Digital currencies issued by central banks can significantly impact monetary policy, money transmission, and financial stability, potentially improving effectiveness and reducing shadow economy and corruption.

Digital Currencies and Relevant Policy Analysis

Digital currencies are not a replacement for credit money, and their impact on the global monetary system and economic patterns requires balanced market rules and a shift to an Earth-based monetary system.

The Financial Implications of the Emergence of Digital Currencies under the Development of the Digital Economy

Digital currencies gradually popularize Internet finance, reducing transaction costs and promoting international economic development.

The Impact of Digital Currency on the Financial System: Universal Decentralized Digital Currency, Is It Possible?

Digital currency has a substitution effect on current deposits in China, and establishing a global financial supervision system is crucial for maximizing welfare.

Impact of Globalization on Central Bank Digital Currencies

Central Bank Digital Currencies (CBDCs) have influenced global financial systems, enhancing cross-border transactions, international trade, and monetary policy coordination.

Digital Currencies and CBDC Impacts on Least Developed Countries (LDCs)

Central bank digital currencies (CBDCs) and digital ledger technology-based currencies (DLT-based currencies) can positively impact financial inclusion in developing countries, but regulatory challenges and emerging technology risks must be addressed.

The impact of using the digital currency in monetary policy

Digital currencies negatively impact monetary policy tools and objectives, as they are difficult to control and direct, and negatively impact the central bank's function in controlling and directing credit.

Digital Currencies and Monetary Policy in the New Era

Central bank digital currencies (CBDCs) may boost monetary policy effectiveness and financial stability, but their geopolitical, geoeconomic, and geostrategic implications must be considered.

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