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on Payment Systems and Financial Technology |
| By: | Maître, Arnaud T.; Pugachyov, Nikolay; Weigert, Florian |
| Abstract: | This paper investigates how investors' abnormal attention affects the cross-section of cryptocurrency returns in the period from 2018 to 2022. We capture abnormal attention using the (log) number of Twitter posts on individual cryptocurrencies on the current day minus a 30-day average. Our results reveal that abnormal attention is positively associated with contemporaneous and one-day ahead crypto performance. Among the different Twitter tweets, return predictability arises due to Ticker-tweets from investors, but not due to tweets from the cryptocurrency channel. These Official-tweets, however, are able to forecast technological innovations on the blockchain. |
| Keywords: | Bitcoin, cryptocurrencies, Twitter attention, textual sentiment |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cfrwps:311833 |
| By: | Hemingway, Benjamin (Bank of England) |
| Abstract: | The introduction of an unremunerated retail central bank digital currency (CBDC) is currently under consideration by several central banks. Motivated by the decline in transactional cash usage and the increase in online sales in the UK, this paper provides a theoretical framework to study the underlying drivers of these trends and the welfare implications of introducing an unremunerated retail CBDC. I develop a cash credit model with physical and digital retail sectors, endogenous entry of firms and directed consumer search. Calibrating to UK data between 2010 and 2022 the model suggests that there are positive welfare gains from introducing an unremunerated retail CBDC, but these have likely declined over time. |
| Keywords: | CBDC; credit; digital currency; money |
| JEL: | E41 E42 E58 |
| Date: | 2024–12–13 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:1101 |
| By: | Jon Durfee; Michael Junho Lee |
| Abstract: | Public permissionless blockchains are designed to be censorship resistant, meaning access to the blockchain is unhampered. In practice, different blockchain ecosystem actors (such as users, builders, or proposers) can influence the degree to which a blockchain is resistant to censorship. In a recent Staff Report, we examine how sanctions imposed by the Office of Foreign Assets Control (OFAC) on Tornado Cash, a set of noncustodial cryptocurrency smart contracts on Ethereum, affected Tornado Cash and the broader Ethereum network. In this post, we summarize findings regarding sanction cooperation at the settlement layer by “block proposers”—a set of settlement actors specifically responsible for selecting new blocks to add to the blockchain. |
| Keywords: | sanctions; cryptocurrency; blockchain; censorship; regulation; decentralized systems; Ethereum |
| JEL: | D40 F51 G18 G28 G29 O30 |
| Date: | 2025–02–14 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednls:99555 |
| By: | Ozili, Peterson K |
| Abstract: | This study considers a world where it is possible to attain full financial inclusion where full financial inclusion means achieving a 100% level of financial inclusion in whichever way financial inclusion is measured. It was argued that increasing the level of financial inclusion is a priority for policymakers in developing countries while many developed countries have already attained a high level of financial inclusion. After the highest possible level of financial inclusion has been attained, countries that have achieved such a feat will think about what next can be done about financial inclusion. This article addresses this issue and offers insights into the course of action that countries can take after achieving full financial inclusion in whichever way financial inclusion is measured. This study also explores the philosophical nature of this question by casting some light into whether attaining full financial inclusion is a worthwhile goal for policymakers to focus on. The insights offered in this study are useful to scholars, policymakers and those responsible for increasing financial inclusion in their countries. |
| Keywords: | financial inclusion, digital financial inclusion, full financial inclusion, criticism |
| JEL: | G21 G28 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123587 |
| By: | Ozili, Peterson K |
| Abstract: | This article proposes a financial literacy theory of financial inclusion. It also presents the different possible scenarios of the relationship between financial literacy, financial illiteracy, financial inclusion and financial exclusion using a grid. The theory argues that financial literacy can influence the level of financial inclusion, and it projects low level of financial literacy as a potential cause of low level of financial inclusion. It showed that people who are financially illiterate and are financially included may not be able to maximise their welfare in the formal financial system because they lack financial literacy. By providing financial literacy programs and other incentives to join the formal financial system, many financially illiterate people will be willing to join the formal financial system and use existing formal financial services to meet their needs. The theory is significant because it explains a major reason why the level of financial inclusion in low in some countries. |
| Keywords: | theory, financial literacy, financial inclusion, financial education, access to finance, financial literacy theory of financial inclusion |
| JEL: | G21 G28 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123588 |
| By: | Rajasekhar Reddy Talla (Archer Daniels Midland (ADM)) |
| Abstract: | This research examines how blockchain technology improves international commerce cybersecurity and efficiency. We want to see how blockchain enhances transparency, reduces costs, and streamlines global trading networks by addressing security risks and inefficiencies. Secondary data-based literature reviews, case studies, and industry reports are used to assess blockchain's trade potential. The research found that blockchain improves cybersecurity by decentralizing data storage, assuring immutability, and preventing fraud and data breaches. Automation via smart contracts, trade paperwork simplification, and supply chain visibility boost efficiency. However, scalability, interoperability, and regulatory issues persist. The report underlines that blockchain may lower costs by removing intermediaries and increasing direct peer-to-peer interactions. Standards, cross-border legislation, and incentives for blockchain implementation, especially for SMEs, have policy implications. It also emphasizes stakeholder engagement and capacity-building to overcome technical and financial hurdles. The research finds that blockchain may transform international commerce by making it safer, more efficient, and transparent, but it needs concerted governmental initiatives to overcome present constraints. |
| Keywords: | Blockchain Technology, Cybersecurity, International Trade, Supply Chain Transparency, Smart Contracts, Trade Documentation, Digital Transformation |
| Date: | 2023–12–31 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04890061 |
| By: | Andrés Alonso-Robisco (BANCO DE ESPAÑA); José Manuel Carbó (BANCO DE ESPAÑA); Pedro Jesús Cuadros-Solas (CUNEF UNIVERSIDAD AND FUNCAS); Jara Quintanero (BANCO DE ESPAÑA) |
| Abstract: | Open banking initiatives, which aim to increase competition and innovation in the financial sector by enabling the customer-authorised sharing of financial data among banks, regulated third-party providers and other financial stakeholders, are becoming widespread around the world. This paper investigates the impact of open banking on the development of the fintech sector, focusing particularly on payment-related financial services. We utilise the implementation of the Second Payment Services Directive (PSD2) in Europe as a natural experiment and employ a difference-in-differences methodology to analyse a unique microdata set of 406 Spanish fintech firms from 2014 to 2022, sourced from the Banco de España Central Balance Sheet Data Office and Fintech Radar. Our findings reveal that following PSD2, fintech firms specialising in payment services (Paytech) improved their performance compared with non-payment fintechs (control), with this improvement driven primarily by revenue growth rather than cost reduction. Additionally, treated fintech firms exhibited a significant reduction in long-term bank debt reliance, securing more stable market-equity funding. We also find that Paytech firms increased their liquidity holdings, reduced their labor intensity while increasing their labor costs and enhanced their productivity. Our results contribute to the literature on open banking by providing empirical evidence of its benefits for fintech firms, particularly in the payment sector, and underscore the importance of regulatory frameworks in fostering innovation and competition. These insights are valuable for policymakers aiming to enhance financial sector dynamics through data-driven regulations. |
| Keywords: | open banking, fintech, payments, PSD2 |
| JEL: | L22 G23 C63 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2514 |
| By: | William Chen; Gregory Phelan |
| Abstract: | Digital currencies provide a potential form of liquidity competing with bank deposits. We introduce digital currency into a macro model with a financial sector in which financial frictions generate endogenous systemic risk and instability. In the model, digital currency is fully integrated into the financial system and depresses bank deposit spreads, particularly during crises, which limits banks’ ability to recapitalize following losses. The probability of the banking sector being in crisis states can grow significantly with the introduction of digital currency. While banking-sector stability suffers, household welfare can improve significantly. Financial frictions may limit the potential benefits of digital currencies (Working Paper no. 23-01). |
| Date: | 2023–03–22 |
| URL: | https://d.repec.org/n?u=RePEc:ofr:wpaper:23-01 |
| By: | Casas, Andreu (Royal Holloway, University of London); Dagher, Georgia; O'Loughlin, Ben |
| Abstract: | In this report we provide an overview of the kinds of data academics need in order to conduct independent research into political online safety matters on social media platforms, and the challenges they currently face. Additionally, we put forward ideas regarding novel governance structures that would enable high-quality independent research, while protecting users’ rights and data privacy, in the United Kingdom. |
| Date: | 2025–01–16 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:7pcjd_v1 |
| By: | Bahloul Naamane (Mohamed Cherif Messaadia University - Université Mohamed-Chérif Messaadia [Souk Ahras]); Sihamdi Imad (Mohamed Cherif Messaadia University - Université Mohamed-Chérif Messaadia [Souk Ahras]) |
| Abstract: | This paper examines the role of the National Centre for Financial Education in promoting financial literacy and inclusion among low-income families in India. The study is based on a comprehensive review of existing literature and available statistics on Indian NCFE coders. The analysis reveals that these programmes have the potential to significantly improve financial culture and inclusion and that financial technology platforms have a role in promoting responsible financial behaviour. |
| Keywords: | Financial Inclusion, Financial Literacy, Financial Technology (fintech) JEL Classification Codes: D12 D14 O10, Financial Technology (fintech) JEL Classification Codes: D12, D14, O10 |
| Date: | 2023–12–30 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:halshs-04521285 |
| By: | Higgs, James; Flowerday, Stephen |
| Abstract: | The video game market is forecasted to be valued at $321.6 billion by 2027. Today, younger generations increasingly prefer spending their leisurely time playing online video games. Beyond providing a leisurely – and often competitive – activity to the bulk of its user base, online video games provide cybercriminals with an environment that is free from the reigns of legal enforcement. More specifically, with the growing popularity and uptake of the microtransaction business model, money launderers are provided with novel channels to move their illicitly gained funds. A continuously expanding body of evidence underscores that money laundering is occurring through online video games. Foremost, cybercriminals are attracted to the anonymity and global reach offered by online video games with few to no controls currently in place to disrupt laundering processes. Furthermore, regulations are struggling to keep pace with the latest money laundering strategies employed by cybercriminals. This paper explores and discusses money laundering in the context of online video games. Core vulnerabilities enabling money laundering to occur through online video games are identified. Security controls to reduce the scale of laundering are proposed. |
| Date: | 2024–11–07 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:fyv6c_v1 |
| By: | Yarygina, Anastasiya; Martínez, André |
| Abstract: | In recent years, tax administrations around the globe have leveraged digital transformation to enhance processes and services to improve tax compliance. Massive self-regularization platforms, which identify noncompliant taxpayers, notify them about the detected inconsistencies, and allow them to amend the situation with the tax authority, are prominent examples of the digital transformation of tax administrations. This study presents the results of the randomized controlled trial evaluating the effectiveness of such a self-regularization platform in the Brazilian State of Para. The results show that the platform increased the amount of the taxes paid by 12.78 times and the probability of tax compliance by 236 percent. Overall, the effectiveness of self-regularization in recovering the evaded tax is 60 percent higher than that of the traditional audit-based approach. The amount of the correction in the declared tax increased by 2.33 times, and the probability of correction by 300 percent. Given the low marginal cost of self-regularization, the results suggest that these platforms are a remarkable opportunity for tax administrations to leverage digital transformation effectively and efficiently, improving tax compliance and increasing tax revenue. |
| Keywords: | digitalization;Tax compliance;Taxpayer support |
| JEL: | H26 H30 H32 O38 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13975 |
| By: | Chintamani Bagwe |
| Abstract: | RegTech is a rapidly rising financial services sector focused on using cutting-edge technology to improve the process of regulatory compliance. RegTech solutions are characterized by numerous features and benefits that can considerably contribute to helping organizations operate effectively in the increasingly regulated environment, when it comes to compliance and risk management. This paper sheds light on why RegTech will be one of the most promising markets, driven by the rising cost of compliance and the growing reliance on technology in crisis management. Moreover, this paper will examine the advantages of using such solutions to strike a balance between compliance and operational efficiencies. This paper will deepen the understanding of regulatory compliance, introduce RegTech, and examine the benefits of using these solutions to achieve compliance. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.18910 |
| By: | Klaus, Hendrik |
| Abstract: | This paper explores the genesis of the German monetary framework between 1866 and 1876, with a specific focus on the 1875 Banking Act. The Banking Act constituted the final piece within the legislation that established Germany's post- unification monetary order, regulated bank note issuance across the Reich, and established the Reichsbank as Germany's first central bank. The Banking Act has rarely featured prominently in the literature, and it has often been regarded as a subordinate aspect of Germany's adoption of a gold currency. Drawing on a broad range of primary sources, this study argues that the Banking Act was in fact the most complicated and politicised element of the monetary reform. The debates on the centralisation of note issuance and banking functions are a fascinating window into how late nineteenth-century monetary management developed within the political imperatives of the time. As a case study, the historical perspective on the development of Germany's monetary framework is relevant in a broader context. It offers insight into the dynamics that have shaped political economies past and present, and it enables us to reflect critically on outcomes and alternatives for specific forms of monetary governance |
| Keywords: | Bankgesetz, Banking Act, Reichsbank, Ludwig Bamberger, Otto Michaelis, financial history, central bank history, free banking |
| JEL: | N13 N23 B15 B17 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ibfpps:311086 |
| By: | Yan Liu; He Wang |
| Abstract: | Leveraging unconventional data, including website traffic data and Google Trends, this paper unveils the real-time usage patterns of generative artificial intelligence tools by individuals across countries. The paper also examines country-level factors driving the uptake and early impacts of generative artificial intelligence on online activities. As of March 2024, the top 40 generative artificial intelligence tools attract nearly 3 billion visits per month from hundreds of millions of users. ChatGPT alone commanded 82.5 percent of the traffic, yet reaching only one-eightieth of Google’s monthly visits. Generative artificial intelligence users skew young, highly educated, and male, particularly for video generation tools, with usage patterns strongly indicating productivity-related activities. Generative artificial intelligence has achieved unprecedentedly rapid global diffusion, reaching almost all economies worldwide within 16 months of ChatGPT’s release. Middle-income economies have disproportionately high adoption of generative artificial intelligence relative to their economic scale, now contribute more than 50 percent of global traffic, while low-income economies contribute less than 1 percent. Regression analysis reveals that income level, share of youth population, digital infrastructure, specialization in high-skill tradable services, English proficiency, and human capital are strongly correlated with higher uptake of generative artificial intelligence. The paper also documents disruptions in online traffic patterns and emphasizes the need for targeted investments in digital infrastructure and skills development to harness the full potential of artificial intelligence. |
| Date: | 2024–08–19 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10870 |
| By: | Bareis, jascha |
| Abstract: | This paper reconstructs how chatbots based on Large language models (LLMs) like ‘ChatGPT’ got hyped into being. It dissects the actors and dynamics that triggered, fueled and disseminated the hype. Through the lens of hype studies the paper interrogates three empirical realms: 1. Company websites where the chatbots are presented, 2. Blog entries and newspaper interviews by prominent tech figures from the Silicon Valley, and 3. New York Times articles in the timespan between November 2022 and August 2024. The paper shows how the chatbot hype is driven by a dynamic between privileged actors (hypers) and a media frenzy both influencing and being carried by society and politics alike. Different interdependent building blocks in the chatbot hype construction are identified: 1. Depicting LLMs chatbots as knowledge models, 2. Entertaining the uncanny and manipulative side of chatbots, 3. Staging a spectacle of competition between tech giants, and 4. Praising the dualism of doomsday apocalypse or a tech-religious calling for a promised future. The paper unravels the core circulated narrative that turns the hype into a powerful societal phenomenon. |
| Date: | 2024–10–29 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:jzde2_v1 |