nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2025–08–11
sixteen papers chosen by
Bernardo Bátiz-Lazo, Northumbria University


  1. The Role of Public Money in the Digital Age By Francisco Rivadeneyra; Scott Hendry; Alejandro García
  2. A review of centralised finance (CeFi) and decentralised finance (DeFi) and its challenges to the lending market. By Al Mamoon, Abdullah
  3. Central bank and media sentiment on central bank digital currency: an international perspective By Boris Hofmann; Xiaorui Tang; Feng Zhu
  4. CBDC and banks: disintermediating fast and slow By Rhys Bidder; Timothy Jackson; Matthias Rottner
  5. Global overview of experiences in fintech development and administration: interim report on the fintech regulatory environment in Aruba By Alexander, Dale; Prescod, Kwesi
  6. Global overview of experiences in fintech development and administration: interim report on trends in fintech sector development in OECD countries and SIDS By Alexander, Dale; Prescod, Kwesi
  7. Mobilizing Green Support through Digital Technology By Jiayin Hu; Shang-Jin Wei; Jianwei Xing; Eric Zou
  8. Adoption drivers and barriers of digital freight transport platforms—An intermodal case study By Bossong, Paul; Reinhardt, Anne; Elbert, Ralf
  9. Monetizing Digital Content with Network Effects By Vincent Meisner; Pascal Pillath
  10. The day after the dollar By Gluschenko, Konstantin; Voronov, Yuri
  11. Reflecting on the recent banking crisis, what are the new financial stability determinants? By Ozili, Peterson K
  12. Complementary Funding: How Location Links Crowdfunding and Venture Capital By Torben Klarl; Alexander S. Kritikos; Knarik Poghosyan
  13. Heterogeneous Exposures to Systematic and Idiosyncratic Risk across Crypto Assets: A Divide-and-Conquer Approach By Aslanidis, Nektarios; Bariviera, Aurelio; Kapetanios, George; Sarafidis, Vasilis
  14. Assure or Insure Cyber Risk? Nonprofessional Investors' Willingness to Invest By Gauch, Kevin; Quick, Reiner
  15. Money and Social Exclusion in Networks By Maria Bigoni; Gabriele Camera; Edoardo Gallo
  16. A narration of banks, economic freedom and liberal democracy By Karan, Mehmet Baha; Westerman, Wim

  1. By: Francisco Rivadeneyra; Scott Hendry; Alejandro García
    Abstract: A well-functioning monetary system is characterized by public and private forms of money that exchange at par as value flows freely between them. A relevant retail public money—whether in the form of cash, a central bank digital currency or both—is a necessary component of such a monetary system.
    Keywords: Central bank research; Digital currencies and fintech; Payment clearing and settlement systems
    JEL: E4 E42 E5 E50 E58
    Date: 2024–07
    URL: https://d.repec.org/n?u=RePEc:bca:bocadp:24-11
  2. By: Al Mamoon, Abdullah
    Abstract: In this work, we systematically analyse the differences and similarities between CeFi (Centralised Finance) and DeFi (Decentralised Finance). Financial technology is rapidly expanding, and large technology firms are making advances in credit markets. The Internet of Value (IOV), with its distributed ledger technology (DLT) as a basis, has developed new types of loan marketplaces. In this paper, we enumerate the prospects & challenges of Centralised Finance (CeFi) lending markets driven by banks and other lending institutes, as well as the benefits of DeFi lending protocols that may support resolving long-standing concerns in the conventional lending landscape. Overall, fintech and big tech credit appear to complement rather than substitute conventional forms of lending. This study provides a comprehensive analysis of the distinctions between CeFi (Centralised Finance) and DeFi (Decentralised Finance) lending. It analyses several aspects including legal considerations, economic factors, security measures, privacy concerns, and market structure. We conclude our study that convergence between centralised finance (CeFi) and decentralised finance (DeFi) can facilitate synergies in the lending market.
    Keywords: Blockchain, Decentralized finance, Centralised Finance, Smart contract
    JEL: E5 E51 F30 G23 G32 O33
    Date: 2025
    URL: https://d.repec.org/n?u=RePEc:zbw:esprep:323253
  3. By: Boris Hofmann; Xiaorui Tang; Feng Zhu
    Abstract: This paper examines the sentiments of central banks and the media regarding central bank digital currencies across 15 major global economies. Leveraging large language models, we develop jurisdiction-level central bank digital currency sentiment indices derived from central bank publications and news articles on a daily basis. Our findings reveal significant divergences between central bank and media sentiments, with notable variations over time and across jurisdictions. Analyzing the interplay between these sentiments, we observe that central bank sentiment tends to exert a stronger influence on media sentiment than the reverse. Additionally, we identify substantial cross-border sentiment spillovers, where sentiment in leading economies shapes sentiment in other regions. Through an event study approach, we demonstrate that cryptocurrency and equity markets primarily respond to shifts in central bank sentiments. Specifically, more positive central bank sentiments on central bank digital currency are associated with negative impacts on cryptocurrency market returns and the stock performance of banking and payment-related firms.
    Keywords: Central bank digital currency (CBDC), central bank communication, media sentiment, large language model (LLM), financial market
    JEL: E58 G12 G18
    Date: 2025–07
    URL: https://d.repec.org/n?u=RePEc:bis:biswps:1279
  4. By: Rhys Bidder; Timothy Jackson; Matthias Rottner
    Abstract: We examine the impact of a retail central bank digital currency, combining survey evidence from German households with a macroeconomic model featuring endogenous systemic bank runs. The survey reveals non-trivial demand for retail CBDC as a substitute for bank deposits in normal times ("slow disintermediation") and increased withdrawal risks during financial distress ("fast disintermediation"). Informed by the survey, the model indicates that introducing a retail CBDC might reduce financial stability because CBDC offers storage-at-scale - making it attractive to run to. We estimate an optimal holding limit which chokes off fast disintermediation and enhances financial stability by shrinking a fragile banking system.
    Keywords: Central bank digital currencies, financial crises, disintermediation, bank runs, banking system, money
    JEL: E42 E44 E51 E52 G21
    Date: 2025–07
    URL: https://d.repec.org/n?u=RePEc:bis:biswps:1280
  5. By: Alexander, Dale; Prescod, Kwesi
    Abstract: This interim report assesses Aruba's potential to leverage fintech, distributed ledger technology and artificial intelligence, by examining the current state of digital regulation on the island. It provides an in-depth overview of the fintech regulatory environment in Aruba, assessing key legislative and institutional frameworks that support digital financial services. In particular, it reviews the regulatory frameworks related to telecommunications, banking, finance and competition management, highlighting the impact of these regulations on business sentiment and investment appetite. The results of the analysis underscore gaps in Aruba's existing regulations, particularly in areas such as universal service, digital inclusion and oversight of electronic commerce and privacy protections. The report includes findings from stakeholder consultations held in February 2025 that emphasize the need for a supportive environment to develop trust in digital services. Ultimately, the report calls for a more comprehensive approach to regulatory frameworks, with a focus on enhanced oversight, market incentives and strategic reforms to encourage financial innovation, and suggests that addressing regulatory gaps and fostering competition would create a more conducive environment for fintech expansion and financial sector modernization in Aruba.
    Date: 2025–07–21
    URL: https://d.repec.org/n?u=RePEc:ecr:col022:82156
  6. By: Alexander, Dale; Prescod, Kwesi
    Abstract: This interim report explores the transformative impact of fintech on global financial markets. It delves into the evolution of fintech from its early stages to the present day, highlighting key innovations such as digital banking, cryptocurrencies and artificial intelligence-driven financial services. The report provides an in-depth analysis of international best practices, regulatory frameworks and the role of government and private sector partnerships in fostering a thriving fintech ecosystem. In particular, the report underscores the importance of regulatory frameworks addressing foreign exchange control, consumer protection, data privacy, cybersecurity and competition management. With case studies from countries including Estonia, Luxembourg, Mexico and the United Kingdom, the report offers valuable insights into the challenges and opportunities in fintech development. It also discusses the Caribbean experience with fintech and distributed ledger technologies, emphasizing the importance of regulatory sandboxes and digital asset frameworks. Ultimately, the report concludes that a balanced regulatory approach fosters financial innovation while mitigating risks, and that effective collaboration between the public and private sectors is crucial for sustainable fintech development.
    Date: 2025–07–18
    URL: https://d.repec.org/n?u=RePEc:ecr:col022:82154
  7. By: Jiayin Hu; Shang-Jin Wei; Jianwei Xing; Eric Zou
    Abstract: A central challenge in the climate crisis is how to mobilize collective action—and who can do it. We show that digital platforms can transform latent support for sustainability into measurable environmental outcomes, while also generating value for the platform itself. We study Ant Forest, a program embedded in Alipay, China’s leading fintech app, which rewards users’ low-carbon behaviors with game points redeemable for planting real trees in arid regions of the country. Since its launch in 2016, the program has engaged over 700 million users and funded the planting of 500 million trees. Using user-level data, we find that participation is significantly higher in cities that have experienced faster vegetation growth. We propose a “green experience” mechanism: visible environmental improvement fosters greater appreciation for nature and increases support for sustainability efforts elsewhere. Survey evidence supports this mechanism, with participants also citing gamification and warm glow as key motivators. We further document spillover effects: Ant Forest participation boosts donations to external environmental projects and increases overall use of the Alipay app. These findings highlight the potential of digital platforms to scale climate action while creating shared environmental and economic value.
    JEL: G20 L81 Q50 Q56
    Date: 2025–07
    URL: https://d.repec.org/n?u=RePEc:nbr:nberwo:34074
  8. By: Bossong, Paul; Reinhardt, Anne; Elbert, Ralf
    Abstract: Increasing environmental pressure urges firms to decarbonize their supply chains by reducing emissions caused by freight transport. This puts intermodal freight transport (IFT) on the agenda. IFT combines the ecological advantages of rail transport with the flexibility of road transport. However, it increases supply chain complexity by creating additional interfaces between the actors involved. This hampers efficiency and calls for automation through digital platforms. By contextualizing the Technology-Organization-Environment (TOE) framework and applying a multiple-case study approach, we aim to investigate why users opt for or against adopting IFT platforms and how adoption can be fostered. Among 30 adoption factors identified, we find that sellers of IFT services fear increased market transparency and interface standardization through platforms, while demanders of IFT services favor these attributes. We contribute to the extant literature by providing a nuanced understanding of the underlying decision rationales from the perspectives of platform users and providers and derive nine levers suitable to increase platform adoption and, hence, supply chain automation.
    Date: 2025–07–10
    URL: https://d.repec.org/n?u=RePEc:dar:wpaper:155782
  9. By: Vincent Meisner (HU Berlin); Pascal Pillath (HU Berlin)
    Abstract: We design profit-maximizing mechanisms to sell an excludable and non-rival good with positive and/or negative network effects. Buyers have heterogeneous private values that depend on how many others also consume the good. In optimum, an endogenous number of the highest types consume the good, and we can implement this allocation in dominant strategies. We apply our insights to digital content creation, and we are able to rationalize features seen in monetization schemes in this industry such as voluntary contributions, community subsidies, and exclusivity bids.
    Keywords: mechanism design; non-rival goods; club goods; network effects; digital content; creator economy;
    JEL: D82
    Date: 2025–07–30
    URL: https://d.repec.org/n?u=RePEc:rco:dpaper:541
  10. By: Gluschenko, Konstantin; Voronov, Yuri
    Abstract: The international monetary system based on the US dollar as the world’s dominant reserve currency has become in recent years risky and unreliable tool of international financial relations. In addition, confidence in the dollar is falling worldwide. These reasons lead to a transformation of the international currency system, primarily aimed at getting rid of the dominance of the US dollar. This transformation is still at the very beginning and it is unclear where it will come. The purpose of this paper is to consider possible directions of the transformation. This is not an attempt at forecasting, but an analysis of potential scenarios with assessments of the feasibility of their implementation. We are discussing a range of possible paths for transforming the international monetary system. One end of the range is the creation of a single supranational currency based on the reformation of Special Drawing Rights (SDR). The other end is the disintegration of the single currency system, which is partly already underway. In between is a return to the gold standard and the displacement of the US dollar by renminbi. However, an unpredictable option due the digitalization of currencies is also possible.
    Keywords: international monetary system supranational currency gold standard renminbi digital currencies
    JEL: F02 F33
    Date: 2025–07–08
    URL: https://d.repec.org/n?u=RePEc:pra:mprapa:125275
  11. By: Ozili, Peterson K
    Abstract: Little attention has been paid to the role of inflation and financial inclusion in influencing financial stability. These factors have become all the more important in light of the recent banking crisis in the United States. The lessons learnt from the recent banking crisis have heightened the need for financial regulators and bank supervisors to undertake continuous search for the non-traditional determinants of financial stability to identify risks early and mitigate risks to financial system stability. In this article, we examine some non-traditional determinants of financial stability using data from sixty-one countries from 2009 to 2021. The first-difference panel GMM regression method was used to estimate the model, and we find that greater financial stability in the previous period is followed by greater financial stability in the subsequent period in all regions, signalling the persistence of financial stability. The loan-to-deposit ratio improves financial stability in European and Americas countries while countries that have a high level of financial inclusion, and whose banking sector have a high loan-to-deposit ratio, are more financially stable. Financial inclusion improves financial stability in high inflation environments particularly in African and Americas countries. High levels of financial inclusion impair financial stability during a recession particularly in Asian countries. African banks with a high loan-to-deposit ratio are more financially stable during a recession. Also, Americas and African countries that have a combined high financial inclusion and inflation rates and whose banking sector have a high loan-to-deposit ratio are less financially stable, indicating that high inflation hinders financial inclusion and loan-to-deposit ratio from improving financial stability.
    Keywords: financial stability, determinants, financial inclusion, inflation, bank efficiency, loan-to-deposit ratio, economic growth, unemployment rate.
    JEL: G01 G20 G21 G23 G28
    Date: 2025
    URL: https://d.repec.org/n?u=RePEc:pra:mprapa:125565
  12. By: Torben Klarl; Alexander S. Kritikos; Knarik Poghosyan
    Abstract: While Equity Crowdfunding (ECF) platforms are a virtual space for raising funds, geography remains relevant. To determine how location matters for entrepreneurs using equity crowdfunding (ECF), we analyze the spatial distribution of successful ECF campaigns and the spatial relationship between ECF campaigns and traditional investors, such as banks and venture capitalists (VCs). Using data from the two leading German platforms – Companisto and Seedmacht – we employ spatial eigenvalue filtering and negative binomial estimations. In addition, we introduce an event study based on the implementation of the Small Investor Protection Act in Germany allowing us to obtain causal evidence. Our combined analysis reveals a significant geographic concentration of successful ECF campaigns in some, but not all, dense areas. ECF campaigns tend to cluster in dense areas with VC activity, while they are less prevalent in dense areas with high banking activity, and are rarely found in rural areas. Thus, rather than closing the so-called regional funding gap, our results suggest that, from a spatial perspective, ECF fills the gap when firms in dense areas seek external financing below the minimum equity threshold offered by VCs and when there are few banks offering loans.
    Keywords: Crowdfunding, Finance Geography, Entrepreneurial Finance, Venture Capital (VC) Proximity
    JEL: G30 L26 M13
    Date: 2025
    URL: https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2134
  13. By: Aslanidis, Nektarios; Bariviera, Aurelio; Kapetanios, George; Sarafidis, Vasilis
    Abstract: This paper analyzes realized return behavior across a broad set of crypto assets by estimating heterogeneous exposures to idiosyncratic and systematic risk. A key challenge arises from the latent nature of broader economy-wide risk sources: macro-financial proxies are unavailable at high-frequencies, while the abundance of low-frequency candidates offers limited guidance on empirical relevance. To address this, we develop a two-stage ``divide-and-conquer'' approach. The first stage estimates exposures to high-frequency idiosyncratic and market risk only, using asset-level IV regressions. The second stage identifies latent economy-wide factors by extracting the leading principal component from the model residuals and mapping it to lower-frequency macro-financial uncertainty and sentiment-based indicators via high-dimensional variable selection. Structured patterns of heterogeneity in exposures are uncovered using Mean Group estimators across asset categories. The method is applied to a broad sample of crypto assets, covering more than 80% of total market capitalization. We document short-term mean reversion and significant average exposures to idiosyncratic volatility and illiquidity. Green and DeFi assets are, on average, more exposed to market-level and economy-wide risk than their non-Green and non-DeFi counterparts. By contrast, stablecoins are less exposed to idiosyncratic, market-level, and economy-wide risk factors relative to non-stablecoins. At a conceptual level, our study develops a coherent framework for isolating distinct layers of risk in crypto markets. Empirically, it sheds light on how return sensitivities vary across digital asset categories -- insights that are important for both portfolio design and regulatory oversight.
    Keywords: Idiosyncratic and systematic risk; divide and conquer; heterogeneous exposures; endogeneity; IV estimation; high-dimensional analysis; multiple testing boosting; principal components; stablecoins; green assets; defi assets
    JEL: C23 C33 C44 C55 C58 G10 G11
    Date: 2025–06–25
    URL: https://d.repec.org/n?u=RePEc:pra:mprapa:125124
  14. By: Gauch, Kevin; Quick, Reiner
    Abstract: Organizations face severe cyber risks, which may lead companies to contract related insurance or to demand cybersecurity assurance services to signal risk management. This paper experimentally investigates how cybersecurity assurance and insurance against cyber risks impact nonprofessional investors. We conducted an experiment with a 2 × 2 between‐subjects design with 100 UK nonprofessional investors and manipulated the assurance provision and insurance purchase to analyze their impact on willingness to invest. Our results suggest that cybersecurity assurance and cyber risk insurance positively affect willingness to invest. The results confirm the usefulness of measures to handle cyber risks and are of interest to managers, auditors, regulators, and academics.
    Date: 2025–07–28
    URL: https://d.repec.org/n?u=RePEc:dar:wpaper:156027
  15. By: Maria Bigoni (University of Bologna); Gabriele Camera (Economic Science Institute, Chapman University); Edoardo Gallo (University of Cambridge)
    Abstract: Globalization offers unparalleled opportunities to expand welfare through cooperation across large networks of unrelated individuals. Social exclusion – permanent or temporary – and monetary exchange are institutions that in theory can incentivize cooperation. In an experiment, we evaluate their relative performance and interaction in anonymous networks of different sizes. Permanent social exclusion (ostracism) reduces long-run economic potential by leading to sparse networks. Monetary exchange and temporary social exclusion perform similarly well in small networks. In large networks, however, monetary exchange is the only institution that promotes full cooperation by crowding out ostracism and keeping the network complete. An insight is that monetary systems outperform social exclusion mechanisms in promoting cooperation in globalized social and economic networks.
    Keywords: cooperation, experiment, money, network, social exclusion
    JEL: C92 E40 D85 C73
    Date: 2025
    URL: https://d.repec.org/n?u=RePEc:chu:wpaper:25-06
  16. By: Karan, Mehmet Baha; Westerman, Wim (University of Groningen)
    Abstract: Probably, the Knights Templar as bankers of the Crusaders and softeners of the Churchs view on taking interest, impressed early Italian bankers. In particular, the Medici family from Florence established good relations with the Church and wisely benefited from the economic conditions during the Renaissance.The Netherlands differed from prior leading areas in that banking developed here in tandem with economic growth in an open environment. Moreover, the skilful Dutch had access to financial markets and controlled them. The bank money of the Amsterdam Bank of Exchange ensured financial stabilityand fuelled economic activity. English banking started with the Goldsmiths, who deposited money from the public. The public trusted the Goldsmiths, who could therefore circulate money deposited with them.In this way, a fractional reserve system emerged. While the financial sector grew under open conditions, the Bank of England started as the first modern central bank. France experimented with paper money, but the experiment under the flamboyant Scot John Law became a failure. During the Napoleonic era, the Rothschilds appeared on the stage. Their banking empire was based on the network of five brothers in major European cities. The Rothschilds, with their strong family ties and circulating money across borders, were virtually untouchable. J. P. Morgan, with his strong relations, was the most notable banker in America's Gilded Age. Beyond this, he was successful also in heavy industries, being an outstanding businessman and a true leader. He even saved the U.S. economy from a crisis twice and co-moulded its central banking system. The Ottoman Bank was one of the oldest modern banks operating in adeveloping country. Being established with much foreign capital, it served as an independent central bank in Turkey after the Ottoman Empire. Throughout the 20th century, banking was largely organized country-wise. ‘National Champions’ such as Citibank dominated the scene, often benefiting fromrelationships in (semi-) colonies. Following the breakdown of the post World War II monetary system, thin lines between creative deal making and clear unethical tactics were crossed by unscrupulous bankers at times. In hindsight, economic freedom and liberal democracy were a critical factor in the developmentof banks as economic cornerstones. It is therefore essential that their entrepreneurial conditions are kept intact, whereas the Global Financial Crisis has shown that controls, internal norm setting and sector innovations may be helpful. Banks and their current partial replacers serve a public task.
    Date: 2024
    URL: https://d.repec.org/n?u=RePEc:gro:rugfeb:2024012-eef

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