Autori
Pelagidis, Theodore
Kostika, Eleftheria

Titolo
Investigating the role of central banks in the interconnection between financial markets and cryptoassets
Periodico
Economia e politica industriale
Anno: 2022 - Volume: 49 - Fascicolo: 3 - Pagina iniziale: 481 - Pagina finale: 507

Over the past two years, financial markets have been heavily affected by central banks' unconventional monetary policies, in particular quantitative easing (QE). Accommodative monetary policies have also brought interest rates down to zero and/or negative territory as a mean to stimulate business investments. The recent rise of cryptocurrencies (The terms cryptocurrencies and crypto assets are used interchangeably.) poses, in turn, urgent challenges to central banks' efforts to face the multiple pandemic-driven unprecedented consequences. Private currencies may lead to a relatively cashless society, thereby threatening central bank monopoly of issuance, a situation in which businesses, households and financial markets could lose access to risk-free central bank money. In addition, Decentralized Finance (DeFi) promises to transform the traditional financial system into an open, permission-less and autonomous financial system. The present paper discusses the rise of digital payments across the euro area, the spread of cryptocurrency trading and the intention of the European Central Bank (ECB) to issue a central bank digital currency (CBDC). We provide evidence on the existence of cointegration between selected cryptocurrencies, stablecoins and traditional financial assets. Both the rise of digital payments and the increased popularity of cryptocurrencies can be seen as the main drivers behind the prospective issuance of the digital euro, significantly affecting financial markets and business models alike.



SICI: 0391-2078(2022)49:3<481:ITROCB>2.0.ZU;2-U

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