Developing central bank digital currencies: a reality check during cryptocurrency euphoria

Authors

  • Iulia Cioroianu Institute for Policy Research, University of Bath, UK
  • Shaen Corbet bDCU Business School, Dublin City University, Dublin 9, Ireland ; School of Accounting, Finance and Economics, University of Waikato, New Zealand https://orcid.org/0000-0001-7430-7417
  • Charles Larkin Institute for Policy Research, University of Bath, UK; Krieger School of Arts Sciences, Johns Hopkins University, Baltimore, MD, USA
  • Les Oxley School of Accounting, Finance and Economics, University of Waikato, New Zealand

DOI:

https://doi.org/10.17811/ebl.12.2.2023.105-114

Keywords:

Exchange Traded Funds., Central Banks, Sentiment, Cryptocurrency, CBDC

Abstract

Using estimated sentiment indices based on CBDC-related social media posts, and testing for the effects of regulatory-related announcements upon blockchain and cryptocurrency-related funds, this research presents two key findings: first, the continued evolution of the pricing structures of digital finance products to respond to such perceived threats constitutes a further evolutionary point in the product's life-cycle. However, secondly, the very fact that returns fall while volatility increases, indicates a largely negative market response to the threat of potential external regulation of cryptocurrencies in the future. The nature of this negative response validates concerns that anonymity continues to be a central attractive feature for cryptocurrency stakeholders, further verifying the necessity for third-party oversight.

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Published

13-07-2023

How to Cite

Cioroianu, I., Corbet, S., Larkin, C., & Oxley, L. (2023). Developing central bank digital currencies: a reality check during cryptocurrency euphoria. Economics and Business Letters, 12(2), 105–114. https://doi.org/10.17811/ebl.12.2.2023.105-114

Issue

Vol. 12 No. 2 (2023): June

Section

Articles

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