Central bank digital currency and systemic risk

Muhammad Suhail Rizwan; Ghufran Ahmad; Anum Qureshi

doi:10.1016/j.intfin.2024.102104

Central bank digital currency and systemic risk

Muhammad Suhail Rizwan, Ghufran Ahmad, Anum Qureshi

Faculty of Business and Law

Research output: Contribution to journal › Article › peer-review

Abstract

Central Bank Digital Currency (CBDC) is an emerging Financial Technology (FinTech) area. Several countries are involved in CBDC development at different stages and a few are already in the launching stage. We use the autoregressive distributed lag approach to explore the association between CBDC-related news and systemic risk in the short and long run by employing dynamic panel heterogeneity analysis. The results show that CBDC-related news has a significant negative association with systemic risk in the long run, indicating a positive reception by the global financial sector. Extended analysis shows that the long-run negative association is consistent across different income levels and geographical regions. However, countries in the advanced stages of CBDC development show a significant positive association between CBDC-related news and systemic risk warranting the utmost care in implementing CBDC initiatives.

Original language	English
Journal	Journal of International Financial Markets, Institutions & Money
DOIs	https://doi.org/10.1016/j.intfin.2024.102104
Publication status	Published - 22 Dec 2024

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10.1016/j.intfin.2024.102104

Cite this

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title = "Central bank digital currency and systemic risk",

abstract = "Central Bank Digital Currency (CBDC) is an emerging Financial Technology (FinTech) area. Several countries are involved in CBDC development at different stages and a few are already in the launching stage. We use the autoregressive distributed lag approach to explore the association between CBDC-related news and systemic risk in the short and long run by employing dynamic panel heterogeneity analysis. The results show that CBDC-related news has a significant negative association with systemic risk in the long run, indicating a positive reception by the global financial sector. Extended analysis shows that the long-run negative association is consistent across different income levels and geographical regions. However, countries in the advanced stages of CBDC development show a significant positive association between CBDC-related news and systemic risk warranting the utmost care in implementing CBDC initiatives.",

author = "Rizwan, {Muhammad Suhail} and Ghufran Ahmad and Anum Qureshi",

year = "2024",

month = dec,

day = "22",

doi = "10.1016/j.intfin.2024.102104",

language = "English",

journal = "Journal of International Financial Markets, Institutions & Money",

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AU - Ahmad, Ghufran

AU - Qureshi, Anum

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AB - Central Bank Digital Currency (CBDC) is an emerging Financial Technology (FinTech) area. Several countries are involved in CBDC development at different stages and a few are already in the launching stage. We use the autoregressive distributed lag approach to explore the association between CBDC-related news and systemic risk in the short and long run by employing dynamic panel heterogeneity analysis. The results show that CBDC-related news has a significant negative association with systemic risk in the long run, indicating a positive reception by the global financial sector. Extended analysis shows that the long-run negative association is consistent across different income levels and geographical regions. However, countries in the advanced stages of CBDC development show a significant positive association between CBDC-related news and systemic risk warranting the utmost care in implementing CBDC initiatives.

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