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The IMF published a paper that looks at how capital flow measures (CFMs) could be implemented with CBDC, and what benefits, risks and complexities could arise. There are several implications of the analysis. First, CBDC ecosystems should generally be designed such that they can accommodate the introduction of CFMs. Second, thanks to the programmability of the payment infrastructure given by the new digital technologies, certain CFMs could likely be implemented more efficiently and effectively with CBDC compared to the traditional system. Third, implementing CFMs requires central banks to collaborate on practices and standards. Finally, CFMs on CBDC need to operate alongside traditional CFMs.

In March 2020, US House Democrats drafted plans to legislate into existence a digital dollar, along with a system of digital wallets. The plan Robert Hockett has been pushing can be instituted by municipal, state, or national authorities, and at the national level can be administered either by Fed or by Treasury. It is the latter - the Treasury - version that he emphasizes here, because it already has half of the requisite digital architecture in place. Treasury has a universal account system - 'Treasury Direct' - available to all citizens and legal US residents. It would be easy for Treasury to issue a new Fed 'dollar bill' equivalent - what Hockett calls 'Treasury Dollar Bills' - receivable into these accounts, then either facilitate easy convertibility into Fed dollar bills or - better yet - declare them legal tender as well. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3599419

According to this paper, the key to identifying promising initial coin offerings (ICOs) lies in the language used in the underlying white papers. ICO project owners, who focused on a comprehensive description of the technological core behind their tokens were 20% more likely to obtain funding as well as 40% more likely to list their tokens on CoinMarketCap, one of the leading price-tracking website for crypto-assets. These ICOs saw their prices increase 24% more than average over 300 days after being listed. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3577208

The Bank for International Settlements Innovation Hub (BISIH) has completed the Project Mandala proof of concept (PoC), which aims to bring efficiencies to anti money laundering (AML), sanctions and capital flow management (CFM) compliance. It uses a compliance by design approach to streamline cross-border compliance processes for financial institutions and explores real-time policy and regulatory compliance monitoring for central banks and other regulators. The project preserves the existing regulatory framework whereby it encodes existing jurisdiction-specific regulatory requirements measures into the system, and maintains the current model, in which financial institutions are responsible for interpreting and applying official regulatory measures. https://www.bis.org/publ/othp87.htm

A couple of European Central Bank (ECB) staffers, including Director General of Market Infrastructures and Payments Ulrich Bindseil, posted a paper that proposes a new approach to clarifying the essence of new payment technologies. It puts forward an etymology of key concepts and reviews terminology and definitions, in the hope of facilitating ongoing discussions about the eventual merits of, and use cases for, such technology. On the basis of the analysis, the paper identifies a number of issues with the emerging key digital payments and decentralized financed (DeFi) vocabulary, including central bank digital currency (CBDC), crypto-assets, smart contracts, stablecoins, tokenization, and wholesale (as used in the CBDC context). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5007868

Using data for the most prominent cryptocurrencies, we find evidence of a significant long-run relationship between prices and fundamentals like the computing power expended on creating their blockchains and the adoption levels of their respective blockchains, even after accounting for the returns of Bitcoin and cryptocurrency price momentum.

"We aim to achieve a number of objectives: to introduce, identify and organize all relevant and meaningful metrics of cryptoasset market share calculation; to develop associations between metrics, and to explain their meaning, application, and limitations so that it becomes obvious in which context metrics can be useful or not, and what the potential caveats are; and to present rich, curated, and vetted data to illustrate metrics and their use in measuring cryptoasset shares in their respective markets. The result is comprehensive guidance into the size of the crypto-economy."

The application of the term "decentralized" to blockchain systems, and making legal judgments based on it, creates a "veil of decentralization" that functions as a liability shield for developers and miners and gives them a core benefit of organizational law without accompanying obligations.

This paper addresses the myth of decentralized governance of public blockchains, arguing that certain people who create, operate, or reshape them function much like fiduciaries of those who rely on these powerful data structures.

The overall goal of any regulation should be to fasten the activities of the most proximate regulators to particular asset classes or value transfer/exchange mechanisms so as to avoid regulatory arbitrage. Where there are no proximate regulations to do so, regulatory sandboxes by the most proximate regulators could be employed.

Our empirical results show that traditional assets such as global equities and global bonds are weak hedges for Bitcoin. Furthermore, we observe that gold acts as a strong hedge against Bitcoin during an extreme bearish Bitcoin market, although the impact is marginal.

Since Bitcoin's largest price decline and the launch of the Bitcoin futures market coincided in December 2017, there have been heated discussions about whether the launch of the futures market crashed the Bitcoin market. This paper empirically shows that this is not so.

This report offers an analytical framework that allows for more systemic assessments of distributed ledger technology (DLT) and its applications. It examines the evolution and typology of the emergent technology, its existing and projected applications, and regulatory and policy issues that they entail. This report highlights the trends, concerns, and potential opportunities of DLTs, especially for Asian markets. It also identifies the benefits and risks to using DLT and offers a functional and proportional approach to these issues.

"We demonstrate that a limited adoption problem arises endogenously in a Proof-of-Work (PoW) payments blockchain. Increased transaction demand increases fees because PoW imposes an artificial supply constraint. The increased fees in turn induce validators to enter the network because of PoW's permissionless nature. The increased network size protracts the consensus process and thereby delays payment confirmation. Given access to traditional payment systems, users prefer to transact via the blockchain only if they possess extreme insensitivity to delays. A PoW payments blockchain therefore cannot obtain widespread adoption."

We develop a theory of long-run equilibrium in blockchain-based financial systems. Our theory elucidates the key market design features that separate proof of work and proof of stake approaches in the long run. Under proof of work, wasteful computation is used to secure the system, and users' utility in equilibrium is determined by the threat of a fork. Under proof of stake, by contrast, users' utility in equilibrium is generally above the fork threat level because custodians can use relational contracts to incentivize a higher quality of service. Relational contracts under proof of stake rely only on local institutions - but combining them with cryptography can create a platform for formal global contracts.

Libra is the first private cryptocurrency with the potential to change the worldwide payment and monetary system landscape. Due to the scale and reach provided by its affiliation with Facebook, the question will be not whether, but how, to regulate it. This short paper introduces the Libra project and analyses the potential responses open to regulators worldwide.

This paper considers the various requirements for identification in the financial sector and the evolving nature of identity and its evolution from analogue to digitized to digital.The establishment of such utilities for digital or electronic identification requires addressing design questions such as registration methods, data availability and cross-jurisdiction recognitions. Yet, as with any reform, a balance between flow-through efficiency and cyber-security needs to be reached to ensure the objectives of financial inclusion and market integrity are not achieved at the detriment of financial stability.

We show that high-risk FinTech loans substitute for bank loans while low-risk loans may be credit expansionary. However, the influence on banks is heterogeneous. Our results highlight the changing landscape of financial intermediation and the regulatory challenges faced by FinTech firms.

"We offer an overlapping generations equilibrium model of cryptocurrency pricing and confront it to new data on bitcoin transactional benefits and costs. The model emphasizes that the fundamental value of the cryptocurrency is the stream of net transactional benefits it will provide, which depend on its future prices."

We construct an empirical measure of spread (EMS) to capture the dynamics of quoted CDS spreads to derive a refined negative CDS-bond basis trading strategy. and find that the EMS can explain the movement of near future CDS spreads.