Dr. Alexey Mikhaylov
Alexey Mikhaylov is Deputy Director of Monetary Relations Research Center, Financial University under the Government of the Russian Federation, Moscow, Russian Federation
Alexey MIKHAYLOV, Ph.D. holds a lecturer position in Financial Markets and Banks Department in Financial University under the Government of the Russian Federation, Russia. He is an author of 30 scientific publications and conference papers indexed in SCOPUS and Web of Science, author of more than 80 scientific publications indexed in relevant scientific databases and author of 8 scientific monographs. He also is Head of laboratory of Financial markets and Banks department in Financial University under the Government of the Russian Federation. He specializes in Energy; Economics, Econometrics and Finance; Business, Management and Accounting; Environmental Science; Materials Science; Mathematics; Computer Science; Psychology; Social Sciences; Neuroscience. He has won numerous awards such as Rector’s Award 2020 (Financial University). He is currently the Guest Editor in Metals (Q1 journal) and International Journal of Economics, Finance and Management Sciences. He has filed patent: Modified machine learning algorithm based on linear regression for forecasting oil prices, taking into account the influence of macroeconomic indicators. He is a member of Young Scientist Board of Financial University under the Government of the Russian Federation, ACI Russia – Financial Markets Association, Council on professional qualifications at the financial market, Russian Association of Crypto Industry and Blockchain.
ORCID ID: https://orcid.org/0000-0003-2478-0307
Central Bank Cryptocurrency as Way of Economic Growth Stimulation
Recent research on digital currencies of Central banks shows that their introduction can have both benefits and significant risks associated with this financial innovation. Since we are talking about potential systemically significant changes in the structure of the banking, financial and payment systems, any miscalculation can have major negative consequences. This is why Bank of China is considering launching such a currency in the near future.
Other regulators went the other way – by creating additional systems and services to achieve the same benefits for consumers as the creation of retail digital currencies of the Central Bank. Systems of fast payments between citizens, which are now being created almost everywhere, make it possible to eliminate the restrictions on the implementation of such payments by using electronic money, which existed in the traditional two-tier banking system. Marketplaces that allow you to quickly open and transfer money to deposits in other banks are another step in the same direction.
Note that the potential risks of creating these systems for individual financial institutions may be comparable to the risks of creating a CBDC. The high speed of payments and the flow of funds between banks increases the importance of the problem of visibility and ensuring competitive offers in the Deposit market for them. In some cases, these payments may also pose financial stability risks. Therefore, the introduction of such systems will require banks to pay more attention to managing liquidity risks. At the same time, our analysis shows that additional changes in the Bank of Russia’s tools for providing liquidity will not be required in this case. As for increasing competition between banks when creating marketplaces, it can increase the efficiency of the transmission channel of de-credit policy. On the other hand, it will require banks to pay more attention to the management of liquidity and interest rate risks.
Currently, there is no evidence that the complete abolition of cash will prevent the spread of crime in the financial sector. Electronic money storage may be easier for criminals than using paper banknotes. In addition, there does not appear to be a global trend towards a cashless society. Although negative interest rates in developed countries may work well in some macroeconomic models, unforeseen changes in real household behavior may hinder the effectiveness of this tool and lead to the destruction of confidence in fiat money.
Whether this will work to the benefit of private money remains to be seen. This approach seems most appropriate for countries whose currencies are not widely accepted outside the country of issue. Of course, while cryptocurrencies are not money. Indeed, the concepts of crypto-Marxism and political economy may become the fundamental basis for the circulation and pricing of Central banks cryptocurrencies in the near future.
In this case, central planning should solve the problem of distributing money between different segments of the population, in order to avoid that a significant amount of CBDC would accumulate in the affluent segments of the population. The concept of crypto-Marxism supports the introduction of an unconditional basic income and direct economic growth stimulation, where fixed amounts are distributed to all citizens through CBDC system, which is relevant during the COVID-19 pandemic.