Central bank digital currency and systemic risk

Rizwan, Muhammad Suhail, Ahmad, Ghufran ORCID: https://orcid.org/0000-0002-2454-9335 and Qureshi, Anum 2025. Central bank digital currency and systemic risk. Journal of International Financial Markets, Institutions and Money 99 , 102104. 10.1016/j.intfin.2024.102104

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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.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Schools > Business (Including Economics)
Publisher:	Elsevier
ISSN:	1042-4431
Date of First Compliant Deposit:	9 January 2025
Date of Acceptance:	14 December 2024
Last Modified:	09 Jan 2025 13:00
URI:	https://orca.cardiff.ac.uk/id/eprint/174926

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