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Potential of decentralized interbank settlements using blockchain

Author

Listed:
  • V. L. Dostov
  • P. M. Shust
  • A. A. Khorkova

Abstract

Digital currency became a relevant topic lately, with the central banks contemplating the idea of issuing their own virtual currencies. Central banks may issue their virtual currencies to simplify interbank cross-border settlements and make them cheaper. In order to achieve this, both commercial and central banks recognize these virtual currencies as means of payments. In these projects blockchain could be used to store information about the digital currencies, instead of fiat money. We have identified the risks associated with the virtual currencies issued by the central banks: conversion and volatility risks. We have looked at different approaches to the distributed ledger, principles for decentralized virtual currencies, possibility of these technologies being used by the central banks, various risks and their mitigation strategies. We also formulated the technological and legal principles that may guide the issuance of the digital currency by the central banks. And reviewed the practicability of issuing virtual currencies by the central banks, based on exogenous and endogenous factors.

Suggested Citation

  • V. L. Dostov & P. M. Shust & A. A. Khorkova, 2018. "Potential of decentralized interbank settlements using blockchain," Strategic decisions and risk management, Real Economy Publishing House, issue 2.
    • Handle: RePEc:abw:journl:y:2018:id:768
    DOI: 10.17747/2078-8886-2018-2-22-25
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    References listed on IDEAS

    as
    1. Walter Engert & Ben Fung, 2017. "Central Bank Digital Currency: Motivations and Implications," Discussion Papers 17-16, Bank of Canada.
    2. Trachuk, Arkady & Linder, Natalia, 2017. "The adoption of mobile payment services by consumers: An empirical analysis results," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 13(3).
    3. Arkady Trachuk, & Natalia Linder, 2017. "The adoption of mobile payment services by consumers: an empirical analysis results," Business and Economic Horizons (BEH), Prague Development Center, vol. 13(3), pages 383-408, July.
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