Table Of ContentDigital Currencies and the New
Global Financial System
This book analyses the current debate around Central Bank Digital Currencies
(CBDCs) and the future of New Global Financial System. It offers deep insight
into the global monetary policy in the context of digital and cryptocurrencies and
examines both the opportunities and challenges to come.
The book draws a clear distinction between digital and cryptocurrencies and
answers several research questions, such as what the consequences of forming
CBDCs and their impact on the financial markets, in both advanced and
developing economies, might be. Another question refers to whether the role of
monetary policy easing has led to the rise of the virtual currency market, while
still others relate to the impact of the pandemic on international settlements. The
book also discusses the issue of investment in cryptocurrencies, and the related
risks, whether this is a profitable investment vehicle, and how the digital banking
system evaluates such investments. Further, the book also highlights the post-
pandemic challenges for central banks, such as future monetary policy. It includes
a complex review of the literature and presents elaborate econometric models of
digital currencies and cryptocurrencies. The book has a wide geographic focus,
examining these aspects from the perspective of several countries, including
China, India and the US.
The primary audience for the book is researchers, scholars and students of
international finance and economics, but it also appeals to practitioners concerned
with the digitalisation of financial systems, policymakers and regulatory agencies.
Ranjan Aneja is Professor and Head of the Department of Economics, Central
University of Haryana, Mahendergarh, Haryana, India.
Robert Dygas is Assistant Professor in the Department of East Asian Economic
Studies, SGH Warsaw School of Economics, Warsaw, Poland.
Routledge International Studies in Money and Banking
Finance and Sustainable Development
Designing Sustainable Financial Systems
Edited by Magdalena Ziolo
The Financialized Economy
Alexander Styhre
Financialization, Financial Literacy, and Social Education
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Moral Hazard
A Financial, Legal, and Economic Perspective
Edited by Juan Flores Zendejas, Norbert Gaillard and Rick Michalek
Mergers, Acquisitions, and International Financial Regulation
Analysing Special Purpose Acquisition Companies
Daniele D’Alvia
Pension Fund Capitalism
The Privatization of Pensions in Developed and Developing Countries
Leokadia Oręziak
Central Banks in Organizational Networks
Entangled Market Actors
Christoph F-D. Wu
Responsible Finance and Digitalization
Implications and Developments
Edited by Panu Kalmi, Tommi Auvinen and Marko Järvenpää
Digital Currencies and the New Global Financial System
Edited by Ranjan Aneja and Robert Dygas
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Routledge-International-Studies-in-Money-and-Banking/book-series/SE0403
Digital Currencies and
the New Global Financial
System
Edited by Ranjan Aneja
and Robert Dygas
First published 2023
by Routledge
4 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
605 Third Avenue, New York, NY 10158
Routledge is an imprint of the Taylor & Francis Group, an informa
business
© 2023 selection and editorial matter, Ranjan Aneja and Robert Dygas;
individual chapters, the contributors
The right of Ranjan Aneja and Robert Dygas to be identified as the authors
of the editorial material, and of the authors for their individual chapters,
has been asserted in accordance with sections 77 and 78 of the Copyright,
Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or
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any information storage or retrieval system, without permission in writing
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British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Aneja, Ranjan, editor. | Dygas, Robert, editor.
Title: Digital currencies and the new global financial system / edited by
Ranjan Aneja and Robert Dygas.
Description: Abingdon, Oxon ; New York, NY : Routledge, 2023. |
Series: Routledge international studies in money and banking |
Includes bibliographical references and index.
Identifiers: LCCN 2022024744 (print) | LCCN 2022024745 (ebook) |
ISBN 9781032315720 (hardback) | ISBN 9781032315737 (paperback) |
ISBN 9781003310365 (ebook)
Subjects: LCSH: Cryptocurrencies. | Digital currency. |
Finance—Technological innovations.
Classification: LCC HG1710.3 .D54 2023 (print) | LCC HG1710.3
(ebook) | DDC 332.4—dc23/eng/20220805
LC record available at https://lccn.loc.gov/2022024744
LC ebook record available at https://lccn.loc.gov/2022024745
ISBN: 978-1-032-31572-0 (hbk)
ISBN: 978-1-032-31573-7 (pbk)
ISBN: 978-1-003-31036-5 (ebk)
DOI: 10.4324/9781003310365
Typeset in Times New Roman
by Apex CoVantage, LLC
Contents
List of figures vii
List of tables ix
List of contributors x
Preface xii
Editors biographies xvi
1 Literature review regarding digital currencies and
cryptocurrencies in the New Global Financial System 1
RANJAN ANEJA AND ROBERT DYGAS
2 Impact of COVID-19 on the payment methods and rise
of digital money 17
WALDEMAR MILEWICZ
3 It’s a time to crypto for retail investors: Cryptocurrencies as
an alternative asset class for optimising an all-equity portfolio 28
SMITA SHUKLA, SHALINI TALWAR AND MANISH TALWAR
4 The impact of inequality and poverty on cryptocurrency use 45
ARTUR TOMECZEK AND MARTA TOMECZEK
5 The price and promise of cryptocurrencies 54
MEELIS KITSING
6 The impact of money supply on the development of virtual
currencies 64
ANETA HRYCKIEWICZ AND PIOTR FILIPIAK
7 Post-pandemic challenges for global central banking 83
ŁUKASZ KUROWSKI AND PAWEŁ SMAGA
vi Contents
8 Issue of central bank digital currencies – potential
consequences for the shape of the financial system 94
MAGDALENA KOZIŃSKA
9 The meaning of decentralised finance (DeFi) 105
GRZEGORZ SOBIECKI, KRZYSZTOF PIECH AND ALEKSANDRA KOPEĆ
10 Toward an European central bank digital currency:
chances and problems 128
ANDREAS BIELIG
11 CBDC design and implementation in the context of
differences between advanced and emerging economies 143
PAWEŁ PISANY
12 Advent of central bank digital currency and the future
of monetary sovereignty 152
VISHAL SARIN AND RANJAN ANEJA
Acknowledgements and conclusion 162
References 163
Index 194
Figures
2.1 Credit transfer and contactless card usage in advanced
economies, 2012–2020 19
2.2 Credit transfer and contactless card usage in emerging market
and developing economies, 2012–2020 20
2.3 Credit transfer and contactless card usage in advanced
economies, 2012–2020 21
2.4 Credit transfer and contactless card usage in emerging market
and developing economies, 2012–2020 21
2.5 Volume of contactless card payments within all card payments,
2016–2020 22
2.6 Cash in circulation worldwide, 2012–2020 in billion USD 24
2.7 Value per withdrawal 25
2.8 Developments of cash withdrawals (per capita, percentage
of GDP) 26
3.1 Bitcoin market capitalisation (2015–2022) 30
3.2 Ethereum market capitalisation (2016–2022) 31
3.3 Efficient frontier comprising all-equity efficient portfolios
constructed using the shortlisted stocks 42
3.4 Efficient frontier comprising crypto-equity efficient portfolios
constructed using the shortlisted stocks and Ethereum 42
4.1 Residual diagnostics: Model_1 50
4.2 Residual diagnostics: Model_2 51
6.1 OECD M3 money supply and BTC market cap
annual average 65
6.2 The most significant events in the virtual currency market
development 67
6.3 Number of virtual currencies in 2013–2022 67
6.4 Capitalization of virtual currencies concerning
total capitalization 69
6.5 The total capitalization of Bitcoin expressed in USD between
2009 and May 2022 70
6.6 The money supply measured by M2 in China, the United
States, Eurozone and Russia 73
viii Figures
6.7 The money supply measured by M2 in Japan, South Korea,
Singapore and Taiwan 75
9.1 Types of networks 106
9.2 The scalability/blockchain trilemma 107
9.3 Taxonomy and comparison of blockchain scalability solutions 108
10.1 Money and currency scopes according to term definitions 130
12.1 Core CBDC features 158
Tables
1.1 The most relevant literature review regarding digital currency
in the New Global Financial System (2013–2021) 3
3.1 The market capitalisation of cryptocurrencies 31
3.2 Types of tokens 32
3.3 Constituents of BSE Sensex 37
3.4 Correlation matrix 39
3.5 Summary statistics of selected stocks 40
3.6 Summary statistics of selected cryptocurrencies 40
3.7 Efficient all-equity efficient portfolios constructed using the
shortlisted stocks 41
3.8 Equity-crypto portfolios 43
4.1 Variables 48
4.2 Summary: Model_1 49
4.3 Summary: Model_2 49
4.4 Multicollinearity test 49
5.1 Top-ten cryptocurrencies by market capitalization
and exchange rate 60
6.1 Participation in the global virtual currency industry 68
6.2 Indicators for virtual currency market development 77
6.3 Summary of the regression results 78
6.4 Summary of the regression results using other financial
asset classes 80
6.5 Summary of the regression results of M2 and different asset
classes in the virtual currency market 80
8.1 CBDCs’ potential features compared to features of cash and
bank sight deposit 97
9.1 Definitions and descriptions of the concept of DeFi 113
10.1 Central bank digital currency core properties 134
