Central banks face rising cross-border supervision costs as banking groups operate across fragmented regulatory regimes, making traditional oversight mechanisms ineffective and increasing crisis risk. While a distributed ledger technology (DLT) settlement hub offers unified visibility, it introduces a novel Security Paradox: complex regulatory detection methods increase monitoring costs and collateral requirements, thereby risking the exit of compliant banks and systemic instability. This working paper presents a formal architecture for a multi-currency, permissioned regional DLT settlement hub-designed to address the complexities and inefficiencies of cross-border supervision and settlement-that maintains monetary sovereignty across jurisdictions. By adopting a "slashing reserve" model, in which coordinating central banks jointly set monitoring, penalties, transparency, and collateral, regional hub security is decoupled from collateral through efficient detection and a Byzantine-fault-tolerant quorum structure. This design enables capital-efficient, Basel-consistent settlement, ensuring stability and sovereignty, even during crises, and provides a blueprint for modern cross-border financial infrastructure.
Technologia rozproszonych rejestrów (DLT), która stanowi fundament Internetu Wartości (IoV), przekształca współczesne rynki pożyczkowe. Protokoły pożyczkowe, będące kluczowym komponentem zdecentralizowanych finansów (DeFi), oferują bardziej elastyczne narzędzia alokacji kapitału niż tradycyjne struktury finansowe. Protokoły DeFi, takie jak Compound, Maker i Aave, odpowiadają na wyzwania napotykane przez klasyczne rynki pożyczkowe, w szczególności banki i scentralizowane platformy pożyczkowe. Przedstawimy także szczegółowy opis mechanizmów działania tych protokołów, z uwzględnieniem ich innowacyjnych podejść do zarządzania ryzykiem oraz zabezpieczeniami. Pomimo swojej innowacyjności protokoły DeFi wciąż wykazują zależność od tradycyjnych systemów finansowych, co wskazuje na złożone relacje między tymi dwoma sektorami. Distributed Ledger Technology (DLT), which forms the foundation of the Internet of Value (IoV), is transforming modern lending markets. Lending protocols, a key component of decentralized finance (DeFi), offer more flexible capital allocation tools compared to traditional financial structures. DeFi protocols, such as Compound, Maker, and Aave, address challenges faced by conventional lending markets, particularly banks and centralized lending platforms. This paper also provides a detailed description of how these protocols operate, highlighting their innovative approaches to risk management and collateralization. Despite their innovation, DeFi protocols still exhibit dependence on traditional financial systems, illustrating the complex relationships between these two sectors.
The implementation of open banking frameworks together with Application Programming Interfaces (APIs) creates significant market changes because they boost financial innovation as well as customer satisfaction while promoting market competition. The research study examines the impact of regulatory movements along with technical advancements which rebuilds conventional banking systems through open banking processes. The security of financial data exchange facilitated through open banking APIs allows financial institutions to link with third-party providers for delivering state-of-the-art personalized services and better access to credit and seamless payments. This analysis focuses on the opportunities along with issues that come from using open banking technology together with the necessity of standardizing API protocols because of privacy threats and digital security vulnerabilities. Open banking serves as a technology that builds financial inclusion by giving consumers full control of their financial data. The findings from industry studies with case examples demonstrate how open banking joint with APIs transitions finance toward a decentralized user-focused system that connects different entities. The research shows that open banking success depends on the teamwork between stakeholders while strong regulatory guides and innovative efforts drive complete exploitation of its potential
Smart contracts provide convenience to the financial industry by automating complex transactions without intermediaries. In the context of decentralized finance, ensuring the correctness, reliability, and efficiency of these automated systems is crucial, especially for loan management processes. This paper presents a formal specification of a smart contract-based loan management system using TLA+. The system is designed to handle various types of loans, including credit-based and collateral-backed loans, managing both regular and early repayments, as well as handling late payments and collateral forfeiture. Our specification defines key components such as loan states, repayment calculations, and collateral management, ensuring that all aspects of the loan lifecycle are rigorously modeled and verified. Safety properties, such as preventing negative loan balances and ensuring proper collateral ownership transfer, are enforced alongside liveness properties that guarantee the system reaches a termination state where all loans are either fully repaid or defaulted. We used the TLC model checker to verify the correctness of the system across all possible states and transitions. The verification process confirmed that the system consistently adheres to its formal specification under a variety of operational conditions. Through the formal specification and comprehensive verification with TLA+, this work enhances the dependability of smart contract based financial systems, providing a secure, verifiable, and resilient loan management framework ready for deployment in real-world DeFi environments.
This paper intends to examine the existence of riba elements (interest) in the products of cryptocurrency exchange companies locally in Malaysia and the international. Two of the chosen international cryptocurrency exchange companies, namely Huobi and KuCoin, and one local company, Luno Malaysia Sdn. Bhd., were analyzed based on their websites and applications. It was found that riba exist in the products offered by international cryptocurrency exchange companies, specifically crypto loans, and lending. Meanwhile, the local one does not offer a product that generates riba. It can be concluded the two products that generate riba seem to be mirroring foreign exchange trading, which comprises leverage and margin in loans and lending. Hence, it is suggested not to subscribe to lending and loans products offered by international cryptocurrency exchange companies. This study implies for Muslim investors, who deal with cryptocurrency. It is recommended to do future research on awareness of riba in the products of cryptocurrency exchanges among Muslim investors.
Since 2009, the process of creating virtual financial assets, in particular bitcoin, has been taking place in Ukraine, as in many countries of the world, and the scale of this activity is growing almost exponentially. The lack of state regulation creates the problem of lack of accounting and control of those negative effects on ecology and economy that arise in the process of creating virtual financial assets, i.e. mining. The work analyzes the findings of domestic and foreign scientists regarding the risks inherent in the creation of virtual financial assets, the main of which are the significant consumption of electricity produced from non-renewable sources, carbon and heat emissions, the use of clean water and the creation of electronic waste. Three stages in mining activity are defined and the problems of risk reduction inherent in each stage are defined. The first stage is decisive in terms of preventive actions regarding the risks that will arise in the next stage. At this stage, it is necessary to decide on the location of the equipment, the type of equipment that will be used in the mining process. In our opinion, providing mining with a unique code in KVED and introducing licensing of the specified activity are mandatory actions of the state on the way to reducing the risks associated with the creation of virtual financial assets. Licensing conditions must contain requirements for minimum energy efficiency, setting limits on the use of electricity and Internet traffic, and obligations regarding the safe disposal of electronic waste. At the second stage, it is important to choose the Proof-of-Stake consensus mechanism, which will allow you to save electricity. The third stage involves providing information on the type and amount of resources that were used during mining, as well as on the amount of carbon and heat emissions, during the release of the created assets to the market. This will enable investors to make informed decisions taking into account their attitude to environmental safety. The need for active actions by the state regarding the recognition of mining as a separate type of activity with its inclusion in the KVED and the introduction of licensing with the inclusion of requirements for reducing risks in miners’ activities in the licensing conditions is substantiated.
In the landscape of traditional banking and supply chain financing, numerous challenges persist, such as high costs, delays, and centralized, opaque financial systems.Our project, 'DBank,' leverages blockchain technology and decentralization to address these issues.The primary aim is to create a blockchain-based platform that integrates supply chain data with financial transactions, thereby reducing costs, improving cash flow, and enabling secure and efficient financing.Additionally, we aim to develop a user-friendly Decentralized Banking Application using Dfinity's Internet Computer and Motoko, which will allow account creation, deposits, withdrawals, and peer-to-peer transactions, fostering financial accessibility.The DBank web application is a transformative solution for supply chain financing challenges in India.It aims to seamlessly integrate supply chain data with financial transactions, addressing inefficiencies and high costs, and providing improved access to credit.Our research methodology included a comprehensive analysis of existing systems to inform the development of DBank.The expected outcomes include enhanced efficiency, transparency, and security in financing processes, reduced costs, and improved liquidity management, marking a significant milestone in India's financial technology landscape.
The advent of Web3 technology and the rise of decentralized finance (DeFi) have sparked a paradigm shift in the financial ecosystem. This paper delves into the transformative potential of DeFi protocols, exploring their structure, functionality, and impact on traditional financial systems. Through a comprehensive review of existing literature and empirical studies, we uncover the advantages and challenges associated with the adoption of DeFi. Our analysis highlights how DeFi platforms, including lending protocols, decentralized exchanges, stablecoins, and yield farming mechanisms, offer enhanced efficiency, reduced costs, and greater accessibility. However, we also underscore the critical issues surrounding security vulnerabilities, regulatory compliance, and market stability that must be addressed to ensure sustainable growth. By proposing critical research questions and suggesting future research directions, this paper contributes to the ongoing discourse on the role of DeFi in reshaping global finance and its potential to create a more inclusive, efficient, and transparent financial ecosystem.
The globalization of banking has led to an increase in cross-border financial transactions. However, latency in processing these transactions poses significant challenges due to the physical distance between data centers located across the globe. This latency impacts transaction speed, customer satisfaction, and regulatory compliance. This paper explores the root causes of data transition latency in cross-border banking transactions, highlights current solutions, and proposes innovative approaches to minimize latency. It emphasizes the importance of leveraging edge computing, optimized routing algorithms, and distributed ledger technologies to enhance transaction processing efficiency while maintaining security and compliance standards.
Legal qualification of bitcoin, cryptocurrencies and "private money" in general raises doubts. Although, economically speaking, these goods perform some of the functions of money, they are not considered as such under the Polish civil code. This led some authors to argue that the rules on performance (and breach) of monetary obligations would not be applicable to cryptocurrencies. However, such a conclusion could cause unacceptable results, e.g. allowing for circumvention of the mandatory rules on maximum interest for late payment. The author proposes a solution to this dilemma. Firstly, it is accepted that cryptocurrencies are not "money" in the meaning of the Polish Civil Code. Therefore, the rules governing performance of monetary obligations do not automatically apply to cryptocurrencies. Secondly, cryptocurrencies cannot also be subject to all rules governing non-monetary performance, as this would lead to results inconsistent with the legislative purpose underlying various provisions of law. To ensure effectiveness of such provisions, a hybrid approach should be adopted. In particular, where justified by its ratio legis, the respective provisions governing monetary obligations should be applied to cryptocurrencies mutatis mutandi.
Artykuł otwiera dyskusję nad wykorzystaniem sieci blockchain w systemie finansowym oraz nad jego współczesną ewolucją. Systematyzuje informacje związane z tematyką rejestrów rozproszonych w finansach. Celem artykułu jest zwrócenie uwagi na możliwą zmianę kierunku w rozliczeniach między instytucjami finansowymi. Autor wykorzystał do analizy dostępną literaturę, artykuły naukowe, źródła internetowe dotyczące zastosowania technologii blockchain w finansach. Autor ma nadzieję, że dyskusja nad tym tematem rozpocznie cykl artykułów i analiz dotyczących sieci blockchain w systemie finansowym, a z czasem możliwa będzie implementacja tej technologii na skalę międzynarodową.
W spoÅeczeÅstwie informacyjnym dochodzi do przesuwania znaczeÅ takich pojÄÄ jak informacja oraz mienie, które sÄ dobrami chronionymi przez prawo. Już sam zapis danych może mieÄ kluczowe znaczenie z perspektywy naszej sytuacji majÄ tkowej. Elektroniczny system pieniÄżny, w którym to podmioty dokonujÄ zapÅat miÄdzy sobÄ â bez udziaÅu banków ani żadnego poÅrednika, ani nawet bez paÅstwowych pieniÄdzy […]
Abstract The aim of the paper is to present the phenomenon of the new virtual currency bitcoin, and analyse its economic significance. The paper examines the origin, notion, functions and mechanism of emission of the BTC. The theoretical aspects of creation of the BTC and its advantages and weakness are also explained. The results of the analysis show that bitcoin does not eliminate current problems of traditional currency but also generates new risks for its users. The risks could as well affect the central banks (the legal risk, the risk to payment system stability, and the reputation risk). Three contributions of this paper to the problem of the BTC are worth distinguishing. Firstly, the scientific literature lacks information and data about the BTC - the main source of information is the Internet which reliability cannot be fully guaranteed. Secondly, periodical examination of development of the risk connected with the BTC is necessary. Thirdly, it is a basis to begin discussion on the new virtual currency which bitcoin is.
Hava Mucolları, Alba Dumi, Zaim Korsı, Elisabeta Duçellari
This paper includes partnerships with community-based organizations, public and private colleges, universities, public school teachers, public health departments. Additionally, more number of community leaders have been trained to deliver educational workshops; PSI has developed a robust workshop leader database, which permits remote access to (and entry of) service delivery information. This will be an important point of administrative changes in Albanian public policies as an obstacle to the operating foreign investments, comparison of EU. Entrepreneurship ambition has worked to support changes in Albanian law that would offer anti-discrimination protections in keeping with international standards. Another point of administrative changes in Albanian public policies as an obstacle to the operating foreign investments, comparison of EU is: (1) International investments contributed to the improvement of Albania’s financial regulatory environment which has strengthened public confidence in the banking system and has provided a more secure, efficient and transparent financial system to meet the credit, savings and insurance needs of businesses and individuals. The paper provides support for legislative initiatives and local government activities that advance the decentralization process and increase the control of local government by local constituents, thus decreasing the control of central authorities. DOI: 10.5901/mjss.2013.v4n10p34