Dear all Publish0x people :)
I have written a policy paper for African Institute for Decentralised Finance and Blockchain (AIDBLOCK) regarding cryptocurrencies and international financial institutions such as the IMF, BiS, and G20.
At the moment, I am in the process of finalizing a new paper focusing on crypto and public monetary policies regarding central banks, governments, and CBDCs.
The paper "Cryptocurrencies and monetary policy" by Grégory Claeys, Maria Demertzis, and Konstantinos Efstathiou for the Bruegel think-tank examines the implications of the growing popularity of cryptocurrencies for monetary policy and central banks. Their work focuses on the potential impact of CBDCs on the financial system and monetary policy transmission.
The authors begin the paper by acknowledging cryptocurrencies' rise and potential to disrupt the traditional financial system. They argue that while the current market capitalization of cryptocurrencies is relatively small and does not pose an immediate threat to monetary policy, their increasing popularity could have implications for the monetary policy transmission mechanism.
Furthermore, the authors write that central banks are considering the introduction of CBDCs as a digital alternative to cash in response to the rise of cryptocurrencies. According to them, CBDCs could offer several benefits, including reduced transaction costs, increased financial inclusion, and faster implementation of negative interest rates. However, the paper also highlights the potential risks associated with CBDCs, such as the possibility of bank disintermediation, which could destabilize the financial system.
The authors discuss several design options for CBDCs, such as whether they should be interest-bearing or not and whether they should be implemented through a token-based or an account-based system. They argue that the optimal design of CBDCs should balance the benefits and risks while ensuring that central banks can continue to conduct monetary policy effectively. The paper concludes that central banks should carefully weigh the potential advantages and drawbacks of CBDCs and consider the implications for monetary policy and financial stability. Furthermore, the authors suggest that central banks collaborate with other institutions and dialogue with the public to ensure a smooth transition to a world with CBDCs.
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